One hundred days and it’s very hard to point to any ground breaking government initiative which will bring about meaningful change or even a single clear policy that will realize the LP campaign promises in a concrete manner.

I look at the first 100 days and I see wasted opportunity.

Of his greatest mandate to fight corruption and initiate reform in government? I see a Truth Commission stopped dead in its tracks, an inability to disturb the status quo across all agencies and the same old payolas clogging up the bureaucracy. I suppose one should be thankful enough for “wang-wang” free streets.

Fiscal reform? Instead of spending his immense political capital to change fundamentally flawed budgetary policies,   I see the tax chief instead trying to justify a painful tax on a toll road.

Hacienda Luisita?  Please.

There are some bright spots to be sure. For one, the economy seems to be moving in the right direction (up not down). But whether this is real or attributable to something PNoy has done however is something else entirely.

The overarching strategy appears to hinge on the promotion of Public-Private Partnerships (or PPPs).  Other than the fact that this is by no means an innovation, infrastructure development by itself is not a recipe for bringing the country out of  its status as the perennial bridesmaid of Southeast Asia into the club of the sought after.  There are tough choices to be made regarding population control, balancing the budget, peace and order plus of course, the manner and degree of aggressiveness in fighting corruption.   Hard decisions require deft political handling and large political capital. While there is still hope, the President has to make these choices soon before his coin runs out.

Let me show you how we are taking your concerns to heart in terms of certain specifics and opportunities to which we are already responding.

If we are truly interested in a square deal for all, then what we shake hands on, should be what endures. To this end, what we will be doing in so far as solicited projects are concerned is to minimize your risk in a meaningful and fair manner.

The government will provide investors with protection against regulatory risk. Infrastructure can only be paid for from user fees or taxes. When government commits to allow investors to earn their return from user fees, it is important that that commitment be reliable and enforceable. And if private investors are impeded from collecting contractually agreed fees – by regulators, courts, or the legislature – then our government will use its own resources to ensure that they are kept whole.

The specifics of such protection will be part of the contracts to be entered into between government and winning bidders of PPP projects. Each project will be looked at differently, and the government will use independent financial advisors to study each project carefully before it is bidded out, to determine what protection is necessary. It is important to note that this protection will be limited to regulatory risk.  Commercial or market risk, which you are in the business of determining, will be borne by investors, as it should be.

Let me provide you an example of how regulatory risk protection may work: A contract between the government and a private entity building a road or a bridge may specify a formula for rate adjustments. If for some reason, a court decision threatens the adjustment, the government will compensate the private concessionaire for the difference between what the tariff should have been under the formula, and the tariff which it is actually able to collect.

This is different from previous contracts where the government provided politically difficult guarantees to investors against market risk. For instance, with power supply contracts in the past, the government committed to buy power output regardless of what the actual demand was.

I am not certain how exactly the President wanted this to be received, given that for the most part, it represents a downgrade from previous approaches which guaranteed both commercial and regulatory risk.

Whatever he had in mind, it is not clear what  mechanism will allow “the government  … to ensure [contracted fees] are kept whole” in the event that “private investors are impeded from collecting contractually agreed fees – by regulators, courts, or the legislature.”   Indeed, it seems legally impossible to conceive of any sort of  indemnity clause which will survive the effects of a court mandated invalidation.

Finally, opening the floodgates to indiscriminate government guarantees is short-sighted and counter-productive.  At the end of the day, the increased cost of a government guaranty against regulatory risk will be borne by  tax payers not now but down the road.  Since most PPP contracts will outlive President Aquino’s administration, he should be wary about putting his signature on a piece of paper which will doom his successor (and the one after that) to additional fiscal  burdens, especially where the benefit is not clear or the need is not immediate.

In my view, the President would have been better off explaining  that the perceived risks of dealing with the Philippine government are not inherent to government per se. They are rather simply the just desserts of dealing with a corrupt Arroyo administration specifically.  You play with fire, you get burned.

Ultimately, the solution to the risk issue is a political one, rather than a legal one.  The so-called regulatory risk is a function of perception regarding government’s credibility from both sides of the rubicon — the consumers on one hand and the investors on the other.  Thus, to minimize regulatory risk, one has to first make the process supremely transparent to ensure that all possible stakeholders are given the opportunity to register their objections.  To this end, the jargon has to be simplified and contracts standardized (for there is comfort in the familiar after all). Finally, the selection process should be strengthened to weed out all but the determined and capable.

More in Part 2.

By contrast, Senator Benigno S. Aquino III ran on seemingly amorphous principles of change and clean government that were the hallmarks of his mother’s  legacy.  As the results of the latest COMELEC tallies would show however,   Noynoy Aquino is riding these principles all the way to Malacanang.

What Gibo, Villar and Dick have failed to recognize is that the Presidential election of 2010 is not really an election in the normal sense of the word but the present day iteration of the same People Power sentiment that fueled the 1986 EDSA revolution.  An 80 to 85% voter turnout despite  long cues  in record high temperatures, the sheer  number of volunteer groups eager to protect the vote as well as the zeal with which  people scrutinized and guarded  the conduct of the election are all evidence of this.

Yellow confetti falls for Noynoy

Critics bemoan the fact that many Filipinos are reduced to electing the “least corrupt”  rather than the “most competent” candidate for the highest post in the land.  But that assertion erroneously presupposes that the two concepts are mutually exclusive.  On the contrary, we cannot deny that it is precisely the sad state of  the country which calls for a comparison not of one’s track record of real and hyperbolic accomplishments but a demonstration of  what one has NOT done despite being surrounded by power.  In this, Noynoy is head and shoulders above everybody else. In the end, Noynoy has shown by his previous conduct that he is the most competent to wield the awful powers of the President by showing its grandest manifestation — that of RESTRAINT.

The 1907 Philippine Assembly

On 8 February 2010 or barely four months before the end of her term,  President Arroyo approved a P 1.54 Trillion Budget for Fiscal Year 2010-2011.  Of this budget, P 800 Billion is  designated as a Special Purpose Fund (SPF) representing “budgetary items that are non-permanent in nature, appropriated to augment obligations of line agencies, governed by special provisions and subject to the President’s approval.” That the SPF is largely under the control of the President would not of itself be remarkable except for the proportion that it bears to the total budget  (more than one-half). According to Prof. Leonor Briones of the University of the Philippines  College of Public Administration, the unprecedented amounts consistently being allotted as SPFs  “[d]istort sectoral and regional budget priorities approved by Congress” and “[w]eakens the ability of Departments and agencies to strategically program spending for their respective services.”  That’s the techno-speak equivalent of saying that the President effectively holds the rest of government by the balls.

Strangely, this situation does not seem to be one allowed by the grand power distribution scheme of the Constitution. At least in theory, there seems to be no doubt that the so-called “Power of the Purse” belongs exclusively to the Legislative.  Article VI, Sections 24 and 25 clearly provide:

“Section 24. All Appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

“Section 25. (1) The Congress may not increase the appropriations recommended by the President for the operation of the government as specified in the budget. The form, content, and manner of preparation of the budget shall be prescribed by law.

“(2) No provision or enactment shall be embraced in the general appropriations bill unless it relates specifically to some particular appropriation therein. Any such provision or enactment shall be limited in its operation to the appropriation to which it relates.

“(3) The procedure in approving appropriations for the Congress shall strictly follow the procedure for approving appropriations for other departments and agencies.

“(4) A special appropriations bill shall specify the purpose for which it is intended, and shall be supported by funds actually available as certified by the national treasurer, or be raised by a corresponding revenue proposal therein.

“(5) No law shall be passed authorizing the transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court and the Heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.

“(6) Discretionary funds appropriated for particular officials shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such guidelines as may be prescribed by law.

“(7) If, by the end of any fiscal year, the congress shall have failed to pass the general appropriations bill for the ensuing fiscal year, the general appropriations law for the preceding year fiscal year shall be deemed re-enacted and shall remain in force and effect until the General Appropriations Bill is passed by Congress.”

Yet, a series of enactments starting from Presidential Decree No. 1177 of former strongman and ball holder extraordinaire Ferdinand Marcos,  subsequently adopted by the Administrative Code of 1997, succeeded in effectively snatching the power of the purse from legislature and giving it instead from the President.

How was this sleight of hand accomplished?

GMA recently approved a P1.5 Trillion Budget

The true “power of the purse” does not arise from the requirement that all revenue bills must originate from Congress as stated in Article VI, Section 24 of the Constitution. Rather, it lies in the dynamic created by the concept that the President must  ask  Congress for money. Thus, more than the authority of  Congress to institute  revenue measures, the real nature of the power shows itself  in the authority of  Congress to WITHHOLD money from the President.

For example, if the President asks Congress for a certain amount of funding for a health care program, the Congress can either: (i) approve the program in toto, (ii) reject it, (iii) reduce the amount of appropriation or (iv) impose certain conditions for the grant.  Thus, the power of the purse becomes evident NOT in the granting of the appropriation but in the fact that if the President wants the approval, she must be  forced to accept the conditions imposed by Congress for the appropriation.

Indeed, the key to the purse, if you will, is not in Section 24 of  Article VI but rather in the decision (to be made again by Congress) to grant the President a Line Item Veto power. The Line Item Veto power is not inherent to the Presidential office and can be conferred only by statute. A more robust explanation and the line item veto’s  strange legal history will be taken up in our Part II.

The Resolution has been the subject of all manner of punditry from armchair lawyers to conspiracy theorists.  In essence, most critics decry both the unholy speed by which the Secretary issued his decision and the fact that he sustained the legally weak defense  of alibi over positive testimony of one of the witnesses.   Adding my own two cents worth to these, most litigators will tell you (as well as anyone else who has had experience petitioning the DOJ) that if there’s one thing that the Department is NOT known for, it’s promptness.  Setting aside the possibility that the Acting Secretary may have precisely chosen to break with this particular DOJ tradition, it is still puzzling that he would act contrary to what prosecutors have historically been inclined (even told) to do , which is to prosecute in the event of conflicting evidence.

Whether Secretary Agra (a former advocate of volunteer legal aid for the poor) deserves the vilification that he is receiving today depends on another question which has only been asked implicitly — whether the resolution to absolve two of the high profile principals in the massacre constitutes simple error which is arguably the Secretary’s to make or rather bears the earmarks of something more sinister.

During the earlier part of my legal career, I was part of the team of private prosecutors that appeared in the case of “People of the Philippines v. Hubert Webb.” Webb, the son of a Philippine Senator, was one of the accused in the brutal rape of Carmela Vizconde and the slaughter of the entire Vizconde household.

Immediately after Hubert Webb was indicted, he questioned the finding of probable cause against him by the DOJ Panel despite producing exculpatory evidence in the preliminary investigation consisting of, interestingly enough , alibi.  Specifically, he presented documentary evidence that would supposedly place him in the United States  at the time that the crime was committed.

The Supreme Court, in Webb v. De Leon [GR No. 121245 (23 August 1995)], ruled that faced with “conflicting pieces of evidence,” the DOJ correctly found probable cause to indict the accused. It also explained that probable cause was synonymous with “probability of guilt” and therefore required a LOWER QUANTUM AND QUALITY of evidence than that required for conviction, to wit:

Given these conflicting pieces of evidence of the NBI and the petitioners, we hold that the DOJ Panel did not gravely abuse its discretion when it found probable cause against the petitioners. A finding of probable cause needs only to rest on evidence showing that more likely than not a crime has been committed and was committed by the suspects. Probable cause need not be based on clear and convincing evidence of guilt, neither on evidence establishing guilt beyond reasonable doubt and definitely, not on evidence establishing  absolute certainty of guilt. As well put in Brinegar v. United States, while probable cause demands more than “bare suspicion,” it requires “less than evidence which would justify . . . conviction.” A finding of probable cause merely binds over the suspect to stand trial. It is not a pronouncement of guilt.

Considering the low quantum and quality of evidence needed to support a finding of probable cause, we also hold that the DOJ Panel did not, gravely abuse its discretion in refusing to call the NBI witnesses for clarificatory questions. The decision to call witnesses for clarificatory questions is addressed to the sound discretion of the investigator and the investigator alone. If the evidence on hand already yields a probable cause, the investigator need not hold a clarificatory hearing. To repeat, probable cause merely implies probability of guilt and should be determined in a summary manner. Preliminary investigation is not a part of trial and it is only in a trial where an accused can demand the full exercise of his rights, such as the right to confront and cross-examine his accusers to establish his innocence. In the case at bar, the DOJ Panel correctly adjudged that enough evidence had been adduced to establish probable cause and clarificatory hearing was unnecessary.

In other words, the Philippine Supreme Court directs that if the Secretary were to err in the exercise of quasi-judicial powers of determining probable cause, he should do so on the side of INDICTING the accused, instead of setting him free.

From all accounts, the Acting Secretary seems to be as astute as any individual who had previously held his position.  Thus, it becomes difficult to justify his decision on account of a mere catastrophic failure to appreciate the ruling in Webb v. De Leon.  Yet the other conclusion is simply too scary to contemplate.

Hope

Better than expected takes from the 10 and 25 year international bonds issued by the Philippine government about a month ago suggests some form of worldwide consensus (helped by the Moody’s bond rating of Ba3) that if there’s one thing that the Philippines has going for it, it’s macroeconomic stability.  This means that as far as perceptions go, the country is less prone to external shocks and therefore has better chances to achieve sustainable growth.  Nevertheless, macroeconomic stability is just one of the ingredients in the cocktail prescribed for Philippine growth.  We briefly mentioned an inclusive strategy in the previous post and it would be worthwhile to mention here that the other elements of a genuinely comprehensive plan are: (i) fiscal strength, (ii) readiness for participation in the global economy and (iii) good governance.

Good governance is a topic best reserved for the future while both fiscal strength and the global economy are more or less self explanatory. However, the importance of a strong poverty alleviation plan cannot be overemphasized and so we will go back to it now.

The traditional view holds that slow economic development results in the lack of improvement in the poverty indices in the country (no medals there). However, a  study conducted by the Asian Development Bank (ADB) and published in 2009 (download it here)  suggests a strong correlation between poverty and the factors that prevent the Philippines from making the jump from South East Asian whipping boy to economic sand kicker in the mold of those big, cool BRICs hunks.

One solution involves a tricky juggling act of increasing country competitiveness by (i) tinkering with the wage formula and (ii) increasing the budget for education from the current level of 2 % to a respectable 4 or 5%.  This tactic should generally result in lower labor costs and a more sophisticated workforce.  In turn, the greater overall productivity will generate more business and higher employment.

Theoretically, higher income per capita will offset the effects of either a lower minimum wage or a moratorium on wage increases.     Stated otherwise, a lower legislated minimum wage  would cease to be relevant when a larger part of the workforce is doing higher level jobs and are therefore earning way beyond any floor set by government.

That having been said, there should be no illusions that it’s going to be a cakewalk.

Someone has to pay for the 3% increase in the budgetary allotment for education.  What’s more, the full effect of  this strategy will only kick in when the kids start graduating from the universities or from technical schools (which will be years after the plan starts implementation).  In the meantime, you can expect the union hounds to be braying all night long.

Another, more pervasive (and no less difficult) solution involves legal and structural reforms that would make it easier for the poor to generate capital and therefore escape the so-called “poverty trap.”  But that will be the topic of our Part III.

Skyscrapers and shanties: a picture of the poverty divide

In a previous article, I said that due to certain restrictions, it is difficult for a political leader in the Philippines to institute or implement genuine ‘course changing’ measures that would bring the country out of its economic doldrums. That’s probably easy enough to say.

The real challenge of course is identifying what those measures should be.  In other words, if you are willing to accept that radical reforms make up the recipe for economic recovery, you must also be ready to justify it and THAT presupposes that you have an idea of the ingredients yourself.

We will reserve that topic for later. What seems obvious however is that whatever that menu of solutions may be, it will not work if it is not a comprehensive program that will benefit everybody, especially the poor.

A report published by the ADB in 2009 (using circa 2006  statistics from the Philippine government) suggests that while the country has experienced “modest growth” through the years, the level of inequality, measured through the Gini coefficient, has hardly changed.  In fact, World Bank Country Director for the Philippines Bert Hofman believes that the level of inequality has actually increased.   This means the gains of the recent moderate boom cycles have only benefited that sector of Philippine society which already earns high income.

At the end of the day, people will not sign on to any plan to overhaul the economy if they don’t see more food coming to their table or if the food is not coming soon enough.  This is significant because that plan may ultimately involve tough reforms that are designed to increase country competitiveness by liberalizing trade laws or lowering the cost of Filipino labor.

Right now for instance, if the country wants to take advantage of the expected decrease in Chinese productivity (due to rising labor costs in that country), it has to compete with countries like Thailand whose minimum wage is four (4) times LESS than the floor set in the Philippines.   At current levels, even China’s minimum wage values are only half those of the Philippines (see ILO Global Wage Report here).

Many of these solutions make a lot of sense on paper but their actual execution would require deft political handling and the ability to deliver results fast.  In the one example that I cited, it is probably simple enough to say that  economic development comes at a cost.  It’s a rather different proposition to explain that the cost will first have to be borne by people who can least afford it.

Villar: too many unanswered questions?

This is the first of what will hopefully be many discourses on the Chief Philippine Executive and the Constitution.

As of this writing, a total of eight (8) candidates have thrown in their hats to compete for the nation’s votes to become the next President of the Republic of the Philippines.

Aquino: Riding the crest of a new wave of `People Power'?

Setting aside the qualifications of the current batch, the problem with choosing the President is this:

Even if all goes well and we elect a veritable political messiah who has the competence, mandate and charisma to pull off the miracle that we all have been waiting for, not only does he (or she) have a short 6 year period within which to do the job,  we don’t know if the President that comes after his term is a bastard that will nullify whatever inroads have been made by his predecessor.

Section 4, Article VII of the present Constitution of the Philippines provides the term limit for the President as follows:

Section 4. The President and the Vice-President shall be elected by direct vote of the people for a term of six years which shall begin at noon on the thirtieth day of June following the day of the election and shall end at noon of the same date six years thereafter. The President shall not be eligible for any reelection. No person who has succeeded as President and has served as such for more than four years shall be qualified for election to the same office at any time.

No Vice-President shall serve for more than two consecutive terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of the service for the full term for which he was elected.

Unless otherwise provided by law, the regular election for President and Vice-President shall be held on the second Monday of May.

The returns of every election for President and Vice-President, duly certified by the board of canvassers of each province or city, shall be transmitted to the Congress, directed to the President of the Senate. Upon receipt of the certificates of canvass, the President of the Senate shall, not later than thirty days after the day of the election, open all certificates in the presence of the Senate and the House of Representatives in joint public session, and the Congress, upon determination of the authenticity and due execution thereof in the manner provided by law, canvass the votes.

The person having the highest number of votes shall be proclaimed elected, but in case two or more shall have an equal and highest number of votes, one of them shall forthwith be chosen by the vote of a majority of all the Members of both Houses of the Congress, voting separately.

The Congress shall promulgate its rules for the canvassing of the certificates.

The Supreme Court, sitting en banc, shall be the sole judge of all contests relating to the election, returns, and qualifications of the President or Vice- President, and may promulgate its rules for the purpose.

Rightly or wrongly, the 1987 Constitution adopts such a pessimistic attitude towards the President that it almost seems to be betting that more often than not, Filipinos will elect the bastard. In the process, it also hampers a “good” President with restrictions that make it extremely difficult for him to deliver the monumental course changing performance that the collective dreams about.

Given its attitude towards the Presidency, it is puzzling why the Constitution even bothers with the Presidential system.

I am not here  suggesting that we do away with this particular model of government (at least not without further deliberation). However, I do think that a structural change is necessary to endow the President with powers that are more commensurate with the task that we want him to undertake or at least remove certain irrelevant restrictions which unduly prevent the Chief Executive from undertaking legitimate actions with long term reach. While there is no argument against the necessity of imposing term limits and other restrictions against the abuse of power,   the key is not to focus on controlling the actions of the President per se but in preventing a bastard from getting to power in the first place.

The OSG has also taken the position that the testimony of Mr. Tanenglian is “suspect” and therefore “valueless.”

That conclusion seems to be borne out of the following premises:

(i) The PCGG does not know the motives for the offer to testify

(ii) It took Mariano Tanenglian 20 years before offering to testify

Testimony is not “suspect”

Even assuming that Mr. Tanenglian has an interest adverse to his brother, this fact alone will not make his testimony untrue.  The Philippine Supreme Court has time and again ruled that a party’s interest is “not a ground for disregarding his testimony,” thus:

While  a party’s interest may to some extent affect  his credibility, his interest alone is not a ground for disregarding his testimony. The argument that the testimony of an interested party is self-serving and therefore inadmissible in evidence misses the essential nature of self-serving evidence and the ground for its exclusion.

[National Development Co. vs. Workmen's Compensation Commission, et al; G.R. No. L-21724, 27 April 1967]

The common objection known as self-serving is not correct because all testimonies are self-serving.

[Hernandez vs. Court of Appeals; G.R. No. 104847, 14 December 1993]

“The law itself provides that a party or any other person interested in the outcome of a case may testify (section 18, Rule 130, Rules of Court). The testimony of an interested witness, this Court has said, should not be rejected on the ground of bias alone, and must be judged on its own merits, and if such testimony is clear and convincing and not destroyed by other evidence on record, it may be believed (U.S. vs. Mante, 27 Phil. 134).”

[Carandang vs. Cabatuando; G.R. No. L-25384, 26 october 1973]

Indeed, testimony by an individual is naturally and generally “self-serving” and made for his own interests. That Mariano Tanenglian has personal interest in the subject of litigation does not necessarily invalidate his testimony.

Regarding a possible ulterior motive, the rule is that in its absence, all testimony must be given full faith and credibility. The presumption is in favor of the good faith.

The PCGG, on the other hand, is presuming just the opposite, which contravenes well known rules of appreciation laid down by the Supreme Court, to wit:

It is settled that when there is no showing that the principal witnesses for the prosecution were actuated by improper motive, the presumption is that the witnesses were not so actuated and their testimonies are thus entitled to full faith and credit. Testimonies of witnesses who have no motive or reason to falsify or perjure their testimonies should be given credence.

[People vs. Gallarde; G.R. No. 133025, 17 February 2000]

Without showing any reason or motive for a prosecution witness to perjure his testimony, the presumption is that no such improper motive exists, and his testimony is worthy of full faith and credit.

[People vs. Carino; G.R. No. 129960, 28 august 2001]

Absent any evidence showing any reason or motive for the prosecution witnesses to perjure, the logical conclusion is that no such improper motive exists, and their testimonies are thus worthy of full faith and credit.

[People vs. Mallari; G.R. No. 145993, 17 June 2003]

Since the presumption is in favor of the witness’ good faith, clear and convincing evidence of bad faith is necessary to overturn the presumption [Heirs of Severina Gregorio vs. Court of Appeals, et al.; G.R. No. 117609, 29 December 1998].   Thus, the government is under no obligation at the first instance to establish goodwill or a noble motive in order to put Mr. Tanenglian on the witness stand.

Corollarily, it seems incongruous for the OSG to automatically attribute ill-motive on a potential witness simply due to his relations to one of the defendants.  As a matter of fact, jurisprudence itself proclaims that relationship should not automatically give rise to a presumption of bad faith, thus:

Relationship per se does not give rise to the presumption of ulterior motive nor does it ipso facto tarnish the credibility of a witness.

[People vs. Vicente, et al., G.R. No. 142447, 21 December 2001]

With respect to motives in “ill-gotten wealth” cases in particular, the High Court in “Tanchangco and Lacson vs. Sandiganbayan, et al.” [G.R. No. 141675-96, 25 November 2005]  recognized that self-serving interests such as protection and benefit are ACCEPTABLE motives, thus:

In tracing and recovering the colossal sums of `ill-gotten wealth’, the PCGG would inevitably collide with powerful interests. Persons who would be able to assist in the prosecution of cases of ill-gotten wealth may understandably be hesitant to cooperate with the PCGG without the assurance of some protection, or perhaps corresponding benefit on their part. There may be some inherent unease with the notion that persons may acquit themselves of their own criminal culpability by striking a deal with the government, yet the process of compromise has long been allowed in our jurisdiction, and in the jurisdiction of other states as well. This holds especially true in the prosecution of ill-gotten wealth cases, which not only involve monumental amounts, but have also acquired immense symbolic value. [emphasis supplied]

Neither is the alleged delay in Mr. Tanenglian’s offer to testify sufficient to destroy the credibility of his testimony, thus:

It has been a consistent ruling of this court that a witness’ delay in testifying does not affect his credibility.

[People of the Philippines vs. Obosa; G.R. No. 132069, 31 May 2000]

It is not uncommon for a witness to a crime to show some reluctance about getting involved in a criminal case. The natural reticence of most people to get involved is of judicial notice. It is understandable for a witness to fear for his safety, especially in this case where PC men were involved in the commission of a crime. Such initial reticence does not affect the witness’ credibility.

[People vs. Caraig; G.R. No. 116224-27, 28 March 2003]

Even more importantly, beyond a preliminary determination that a witness is qualified for discharge and/or immunity under the rules, neither the PCGG nor the OSG have any business preempting the rightful prerogative of the courts to decide on issues such as the credibility of the witnesses and weight of their testimony.

By placing unnecessary obstacles to the testimony of Mr. Tanenglian, the prosecution is effectively depriving the Sandiganbayan of the opportunity not only to hear evidence but also to perform its constitutionally mandated function.

First Reason: The danger that Mariano Tanenglian  will “suddenly [change] his mind and [turn] his back on [the State][1]?”

The first reason offered by the Solicitor General to vindicate her recommendation is her concern that the witness may retract his statements or renege on his agreement to present evidence after immunity or discharge is granted by the State.

The “possibility” of such occurrence has to be acknowledged, but is the danger of retraction of such magnitude and degree that it would warrant the outright rejection of the offer of a willing witness to testify? My candid opinion is that it isn’t.

Discharge as state witness

The provision on “discharge” of a person accused as state witness is found in Section 17 of Rule 119 of the Rules of Court:

“Section 17. Discharge of the Accused to be a State Witness. When two or more persons are jointly charged with the commission of any offense, upon motion of the prosecution before resting its case, the court may direct one or more of the accused to be discharged with their consent so that they may be witnesses for the state when, after requiring the prosecution to present evidence and the sworn statement of each proposed state witness at a hearing in support of the discharge, the court is satisfied that:

“(a) There is absolute necessity for the testimony of the accused whose discharge is requested;

“(b) There is no other direct evidence available for the proper prosecution of the offense committed, except the testimony of the said accused;

“(c) The testimony of said accused can be substantially corroborated in its material points;

“(d) Said Accused does not appear to be the most guilty; and

“(e) Said accused has not at any time been convicted of any offense involving moral turpitude.

“Evidence adduced in support of the discharge shall automatically form part of the trial. If the court denied the motion for discharge of the accused as state witness, his sworn statement shall be inadmissible in evidence.”

Note that the last sentence of Section 17 explicitly provides that “[i]f the court denied the motion for discharge x x x, his sworn statement shall be inadmissible in evidence.” This can only mean that before one may be considered a state witness and therefore be entitled to the effects of the discharge, he is required to execute a sworn statement containing the substance of his testimony.

The sworn statement mandated under the foregoing rule (which is usually in the form of an Affidavit) by itself provides a good measure of protection against the possibility of retraction.  A witness who contradicts the contents of his sworn statement will subject himself to Perjury punishable under Article 183 of the Revised Penal Code.

Thus, even absent any specific provision in the proposed Immunity Agreement which provides for sanctions against retraction of testimony, the requirement of the Rules to execute a Statement under oath already serves to deter the possibility that the “[witness] may refuse to cooperate with the Republic without any damage or prejudice to himself.”

Furthermore, the witness will not be discharged until he actually testifies against the accused in a criminal case in accordance with his sworn statement. Section 18 of the same Rule 119 states:

“Sec. 18. Discharge of accused operates as acquittal. – The order indicated in the preceding section shall amount to an acquittal of the discharged accused and shall be a bar to future prosecution for the same offense, unless the accused fails or refuses to testify against his co-accused in accordance with his sworn statement constituting the basis for the discharge.”

[emphasis supplied]

Immunity from prosecution

For immunity from “future prosecution,” section 5, of Executive Order No. 14, as amended (the provision which empowers the PCGG to grant immunity from criminal prosecution) provides:

“Sec. 5. The Presidential Commission on Good Government is authorized to grant immunity from criminal prosecution to any person who provides information or testifies in any investigation conducted by such commission to establish the unlawful manner in which any respondent, defendant or accused has acquired or accumulated the property or properties in question in any case where such information or testimony is necessary to ascertain or prove the latter’s guilt or his civil liability. The immunity thereby granted shall be continued to protect the witness who repeats such testimony before the Sandiganbayan when required to do so by the latter or the commission.”

In the case of “Placido L. Mapa, Jr. et al vs. Sandiganbayan” [G.R. No. 100295, 26 April 1994], the Supreme Court held that the PCGG has ample discretion to impose conditions for the grant of immunity, thus:

“Contrary to the ruling of the respondent court, the failure of petitioners to testify in the RICO cases against the Marcoses in New York can not nullify their immunity. They have satisfied the requirements both of the law and the parties’ implementing agreements. Under Section 5 of E.O. No. 14, as amended, their duty was to give information to the prosecution, and they did. Under their Memorandum of Agreement, they promised to make themselves available as witnesses in the said RICO cases, and they did. Petitioners were ready to testify but they were to called to testify by the US prosecutors of the RICO cases. Their failure to testify was not of their own making. It was brought about by the decision of the US prosecutors who may have thought that their evidence was enough to convict the Marcoses. Since petitioner’s failure to testify was not of their own choosing nor was it due to any fault of their own, justice and equity forbid that they be penalized for their withdrawal of their immunity.” [emphasis supplied]

So, not only is the PCGG authorized to impose additional requirements not appearing in Section 5 of EO 14, the decision seems to imply that it is the duty of the PCGG to impose the conditions for the grant.  Indeed, the text of the Decision takes for granted the fact that a failure to testify allows the withdrawal of immunity.

In this connection,  recall that one of the reasons publicly offered by the OSG is that “the agreement does not provide any sanction/penalty/liability in the event that Tanenglian reneges on his obligations” and stops at that. If the statement is true and the agreement is indeed lacking in this respect, it would have been a simple matter for the OSG to recommend certain conditions which it deems would be sufficient to protect the State instead of rejecting the offer outright.

Similar to the case of a discharge, the OSG and eventually the PCGG may require Mariano Tanenglian to execute an affidavit and testify before any court. As discussed earlier, this by itself operates as a deterrent against retraction.

Indeed, the PCGG is also authorized to broaden or limit the scope of immunity granted to the applicant. This discretion was recognized by the Supreme Court in Jesus T. Tanchangco, et al. vs. Sandiganbayan, [G.R. No. 141675-96, 25 November 2005] where it stated:

“From these premises, we can draw useful conclusions. Section 5 is worded in such a manner as it does not provide any express limitations as to the scope of immunity from criminal prosecution that the PCGG is authorized to grant. The qualifications that Section 5 do provide relate to the character of the information or testimony before the PCGG of the grantee of the immunity, namely, that it “establish[es] the unlawful manner in which any respondent, defendant or accused has acquired or accumulated the property or properties in question in any case where such information or testimony is necessary to ascertain or prove the latter’s guilt or his civil liability.

Xxx

“Another consideration impels us to sustain this broad application of immunity under Section 5 of E.O. No. 14-A. We cannot ignore the special circumstances under which the PCGG was created, and the extra-ordinary powers with which it was vested. The Freedom Constitution itself, under which the body was created, recognized the need “to [r]ecover ill-gotten properties amassed by the leaders and supporters of the [Marcos] regime”. It has been acknowledged that the PCGG is “charged with the Herculean task of bailing the country out of the financial bankruptcy and morass of the previous regime and returning to the people what is rightfully theirs. For this reason, the PCGG was granted quasi-judicial functions encompassing special investigatory and prosecutorial powers. Among them, the power to grant immunity.

Xxx

“The overwhelming need to prosecute the ill-gotten wealth cases is entrenched in statute and public policy. The stakes being as they are, the need is apparent for a highly conducive environment under which witnesses may be induced to cooperate with the PCGG in the prosecution of the ill-gotten wealth cases. The authorization of the PCGG to broadly extend criminal immunity, as is apparent in the language of section 5, is attuned to such claims. Certainly, Section 5 as constructed leads to a reasonable conclusion that the scope of criminal immunity which the PCGG may offer need not be limited to prosecution relating to the information or testimony offered by the witness. And it is apparent on the face of the Cooperation Agreement with Tanchangco that the PCGG understood just as well that it had the power to grant criminal immunity even over such acts which did not directly bear on the information or testimony.

“Our conclusion is also supported by the fact that based on the PCGG immunity agreements which have come before this Court, the scope of offered immunity has proven variable. For example, the grant of immunity accorded by the PCGG to Jose Yao Campos and his family was qualified only by reference to Section 5 of E.O. No. 14. On the other hand, the immunity received by Placido Mapa and Lorenzo Vergara was limited “over any offense with reference to which [their] testimony and information are given, including any offense and commission of which any information, directly or indirectly derived from such testimony or other information is used as basis thereof, except a prosecution for perjury and/or giving false testimony.” In Tanchangco’s case, his entitlement to criminal immunity applies to three determinate circumstances: for acts committed while he was in the service of the Marcos government; acts committed in behalf of the Marcos government; and any other acts revealed by him in the course of his cooperation with the PCGG.

“These variances are indicative of the fact that the PCGG has the discretion to vest appropriate levels of criminal immunity according to the particular witness. There are several factors that may affect his choice, which may include the relative importance of the witness to the prosecution of ill-gotten wealth cases, the degree of culpability of such cases, or even the condition expressed by the witness as sufficient to induce cooperation. Given the language of Section 5, we do not doubt that latitude afforded to the PCGG in determining the extent of criminal immunity. [emphasis supplied]”

Furthermore, instead of immunity from criminal prosecution, the PCGG is authorized to grant  only “civil immunity” to Mr. Tanenglian.

In this connection, it may be worthwhile to note that Mr. Tanenglian’s offer pertains to an offer to testify in “Republic of the Philippines vs. Estate of Ferdinand Marcos, et al”.   This case is civil in nature and in fact bears a docket number denominated as CIVIL CASE NO. 005. Thus, the pertinent provision is Section 3 of E.O. No. 14, which states:

“Section 3. Civil suits for restitution, reparation of damages or indemnification for consequential damages, forfeiture proceedings provided for under Republic Act No. 1379, or any other civil actions under the Civil Code or other existing laws, in connection with Executive Order No. 1 dated February 28, 1986 and Executive Order No. 2 dated March 12, 1986, may be filed separately from and proceed independently of any criminal proceedings and may be proved by a preponderance of evidence.”

This was confirmed in Republic of the Philippines vs. Sandiganbayan [G.R. No. 84895, 4 May 1989] where the Supreme Court interpreted Section 3 in this wise:

“[T]he PCGG may file an independent civil action separate from the criminal action. Hence, section 5 thereof which empowers the PCGG to grant criminal immunity must be interpreted to relate only to a criminal action and not to a civil action. In case of a civil action, the power to grant immunity or the making of the decision not to file a civil case or to drop one already in progress must be related to section 3 of the law which specifically provides for the procedures and the applicable laws in the prosecution of civil suits.”

That being the case, the Supreme Court went on to declare that the power of the PCGG to grant immunity is not derived from Section 5 but on the rules of compromises under the Civil Code, to wit:

“In the absence of an express prohibition, the rule on amicable settlements and/ or compromises on civil cases under the civil code is applicable to PCGG cases.”

The case concluded:

“We thus hold that the Cooperation Agreement, validly undertaken between the PCGG and Tanchangco as it was, precludes the prosecution of Tanchangco under the subject charges. The Sandiganbayan acted with grave abuse of discretion in refusing to dismiss the charges despite its lack of jurisdiction to continue hearing the cases against Tanchangco. In the present petition, insofar as it relates to Tanchanco, must be granted. It goes without saying  though that this ruling does not shield all grantees under Section 5 of E.O. No. 14-A from all kinds of criminal prosecution. The extent of immunity available to each particular grantee depends on their respective immunity agreements with the PCGG and the surrounding facts.”

In other words, in lieu of an outright denial of the offer to testify, the OSG would have been well within rights to recommend the grant of civil immunity only, depending on the circumstances of the case.

Consequently, it is clear that from a legal standpoint, the fear of retraction should not be an overriding factor that would warrant the outright rejection of Mr. Tanenglian’s testimony. Even if the possibility of such retraction is acknowledged, certain measures can be undertaken to minimize the impetus for its occurrence.