YELLOW PAD

By Filomeno Sta. Ana III

One of the first acts done by Ferdinand Marcos, Jr. as President of the Republic of the Philippines was to veto an enrolled bill, which the House of Representatives and the Senate approved during the Duterte administration. This enrolled bill is titled “An Act Establishing the Bulacan Airport City Special Economic Zone and Freeport, Province of Bulacan and Appropriating Funds Therefor.”

In returning without his signature the Enrolled Bill (also known as House Bill No. 7575), the new President explained his objections to the enrolled bill.

The bill has “provisions that pose substantial fiscal risks to the country and its infringement on or conflict with other agencies’ mandates and authorities.”

The enrolled bill providing fiscal incentives without going through a rigorous cost-benefit analysis done by government “will significantly narrow our tax base.”

The President’s letter emphasizes that an existing law — The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act — “already allows eligible enterprises to apply for and avail [themselves] of tax incentives outside economic zones by providing a favorable incentive package without the need for creating new special economic zones.”

The President writes that the Enrolled Bill contradicts existing rules and laws “by failing to provide audit provisions for the Commission on Audit, procedures for expropriation of lands awarded to agrarian reform beneficiaries, and a master plan for the specific metes and bounds of the economic zone.” Further, “the enrolled bill grants the economic zone authority rule-making powers relative to environmental protection that is not found in the charter of other economic zones.” And the enrolled bill gives “blanket powers to handle technical airport operations,” which contravenes aeronautical laws.

In addition, it does not make economic sense that the Bulacan Airport City will be located close to the Clark airport. This does not result in complementarity but can lead to ruinous competition.

Thus, the veto.

The arguments for the veto are solid. But what makes us curious about this issue is why the new President vetoed an enrolled bill transmitted by the previous House of Representatives and Senate?

Legally, this is allowed. Said a colleague, who is a lawyer, “As long as the 30-day period within which the previous President should sign, not sign, or veto a bill hasn’t lapsed, then the next President has the authority to exercise the authority. Otherwise, there will be a vacuum on who should exercise the presidential power.”

But why did Marcos veto the enrolled bill, one of his very first acts upon assuming office? Has he been tracking and studying this bill assiduously, giving him the confidence to veto the bill on the first day of his being President?

This has led to speculation and rumor. One, for example, goes: does Marcos Jr. want to regain control over San Miguel? Or, as others speculate, is this political retaliation against Ramon S. Ang (RSA)? (But RSA attended Marcos Jr.’s inauguration, and RSA is friendly to all politicians.) A friend heard the rumor that the idea of a veto came from Justice Secretary Boying Remulla, former congressman from Cavite, since the proposed perks for the Bulacan City Airport would be disadvantageous to the Sangley International Airport. All these are conjectures; there’s no evidence to show.

“Curiouser” still is why former President Rodrigo Duterte did not veto the bill. It was no secret that his Finance Secretary Carlos Dominguez and the economic team objected to the bill.

Also “curiouser” is the timing of the transmittal of the bill to the Office of the President. The House of Representatives passed the bill on Sept. 15, 2020. But the Senate approved the same bill much later, on May 26, 2022. That gave Duterte a narrow window to act on the bill — whether to sign or veto it. His term ended on June 30. Any bill would lapse into law after 30 days, if unsigned by the President.

Those pushing for the passage of the bill knew that Duterte’s Department of Finance (DoF) was opposed to the bill, and that Secretary Dominguez would ask President Duterte to veto the bill. Hence, a clever ploy — and this is likewise done in relation to other bills which the President would likely reject — was to delay the transmittal of the enrolled bill, giving the outgoing President little time to scrutinize and veto it.

But here’s the piece of evidence we do have: Secretary Dominguez acted quickly and decisively to have the controversial bill vetoed. On June 2, Secretary Dominguez sent a memorandum for President Duterte through Executive Secretary Salvador Medialdea to veto the enrolled bill.

The Dominguez memorandum was thoroughly written, leaving no stone unturned. It is a good example of what is called “complete staff work.”

The arguments found in Marcos Jr.’s veto of the bill are essentially the arguments expounded in the Dominguez memorandum. Wrote Dominguez:

The bill if it became law would have resulted in “enormous tax leakages.” Forgone revenues from income tax and value-added tax would have amounted to P1.62 trillion. This was apart from forgone revenues arising from the 10-year construction such as franchise taxes, permit fees, and supervision fees.

The bill would have given the “Bulacan Ecozone Authority to unilaterally determine and expand specific metes and bounds.” This provision that prevents government approvals for delineating specific metes and bounds is not found in the laws for other ecozones. This means that the Bulacan Ecozone Authority can unilaterally expand its territory.

The bill “promotes conflicts of interests in the implementation of projects.” The Bulacan Ecozone Authority is both a regulator and implementor of projects within the zone.

The bill allows members of the private sector “to influence the disbursement of public funds.”

The bill carves out the Bulacan ecozone’s authority from general laws and rules and regulations. This undermines the Administrative Code of 1987, the Philippine Immigration Act of 1940, the GOCC (Government-Owned and -Controlled Corporation) Governance Act of 2011, and Executive Order No. 325 (series of 1996), which pertains to the reorganization of Regional Development Councils.

It is reasonable to conclude then that the Dominguez memorandum reached Marcos Jr. and his economic managers. Moreover, Marcos Jr. and his economic team agreed with Dominguez and the DoF (and Duterte) to veto the bill.

Thus, what could have been a clever ploy to disable an outgoing President from vetoing a controversial bill boomeranged. This should likewise dissuade vested interests and lobbyists from pursuing such tactics in the future. This episode also shows that to defeat such a cunning ploy, one needs a Dominguez (used as a metaphor) to be a champion and a good team to do complete staff work and convince the principal, the President of the Philippines.

This column was originally published in BusinessWorld on July 4, 2022: https://www.bworldonline.com/opinion/2022/07/03/458888/curiouser-and-curiouser/