Professional Documents
Culture Documents
Unit 4
Unit 4
Learning Objectives
To analyze social.political, economic, or cultural issues in the Philippines using the lens of history.
To recognize that the problems of today are consequences of decisions and events that happened in the
past.
To propose recommendations or solutions to present day problems based on the understanding of the
past and anticipation of the future through the study of history.
This chapter is dedicated to enduring issues in Philippine society,which by studying history could lend its
hand in understanding, and hopefully, proposing solutions.These topics include the mandated discussion
on the Philippine constitution, policies on agrarian reform, and taxation.It is hoped that these
discussions will help us propose recommendations or solutions to present day problems based on our
understanding of root causes,and how we anticipate future scenarios in the Philippine setting.
64
The Constitution of the Philippines, the supreme law of the Republic of the Philippines,has been in effect
since 1987.There are only three other constitutions that have effectively governed the country:the 1935
Commonwealth Constitution,the 1973 Constitution, and the 1986 Freedom Constitution.However,there
were earlier constitutions attempted by Filipinos in the struggle to break free from the colonial yoke.
1897:Constitution of Biak-na-Bato
The Constitution of Biak-na-Bato was the provisionary Constitution of the Philippine Republic during the
Philippine Revolution,and was promulgated by the Philippine Revolutionary Government on 1
November 1897.The constitution,borrowed from Cuba,was written by Isabelo Artacho and Félix Ferrer in
Spanish,and later on,translated into Tagalog.
The organs of the Government under the Constitution are1)the Supreme Council,which is vested with
the power of the Republic,headed by the president and four department secretaries;the interior,foreign
affairs, treasury,and war;(2) the Consejo Supremo de Gracia Y Justicia (Supreme Council of Grace and
Justice),which is given the authority to make decisions and affirm or disprove the sentences rendered by
other courts,and to dictate rules for the administration of justice: and(3) the Assamblea de
Representantes (Assembly of Representatives),which was to be convened after the revolution to create
a new Constitution and to elect a new Council of Government and Representatives of the people.
The Constitution of Biak-na-Bato was never fully implemented,since a truce,the Pact of Biak-na-Bato,was
signed between the Spanish and the Philippine Revolutionary Army.
Chapter 4|Social.Political,Economic,and Cultural Issues in Philippine History 65
The separation of the Philippines from the Spanish monarchy and their formation into an independent
state with its own government called the Philippine Republic has been the end sought by the Revolution
in the existing war, begun on the 24 th of August,1896;and,therefore,in its name and by the power
delegated by the Filipino people,interpreting faithfully their desires and ambitions,we the
representatives of the Revolution, in a meeting at Biac-na-bato,November 1,1897 unanimously adopted
the following articles for the constitution of the State.
1899:Malolos Constitution
After the signing of the truce,the Filipino revolutionary leaders accepted a payment from Spain and
went to exile in Hong Kong.Upon the defeat of the Spanish to the Americans in the Battle of Manila Bay
on 1 May 1898. The United States Navy transported Aguinaldo back to the Philippines.The newly re-
formed Philippine revolutionary forces reverted to the control of Aguinaldo,and the Philippine
Declaration of Independence was issued on 12 June 1898,together with several decrees that formed the
First Philippine Republic.The Malolos Congress was elected,which selected a commission to draw up a
draft constitution on 17 September 1898,which was composed ce wealthy and educated men.
The document they came up with,approved by the Congress on 29 November 1898 and promulgated by
Aguinaldo on 21 January 1899,was titled”The Political Constitution of 1899” and was written in
Spanish.The constitution has thirty-nine articles divided into fourteen titles,with eight articles of
transitory provisions, and a final additional article.The document was patterned after the Spanish
Constitution of 1812,with influences from the charters of Belgium,Mexico,Brazil,Nicaragua,Costa Rica
and Guatemala and the French Constitution of 1793.According to Felipe Calderon,mai author of the
constitution,these were studied because these countries shared similar social,political,ethnological,and
governance conditions with the Philippines. Prior constitutional projects in the Philippines also
influenced the Malolos Constitution, namely:the Kartilya and the Sanggunian-Hukuman,the charter of
laws and morals of the Katipunan written by Emilio Jacinto in 1896;the Biak-na-Bato Constitution of
1897 planned by Isabelo Artacho;Mabini’s Constitutional Program of the Philippine Republic
Of 1898,the provisional constitution of Mariano Ponce in 1898 that followed the Spanish
constitutions;and the autonomy projects of Paterno in 1898.
We,the Representatives of the Filipino People,lawfully convened, in order to establish justice, provide
for common defense,promote the general welfare and insure the benefits of liberty,imploring the aid of
the Sovereign Legislator of the Universe for the attainment of these ends,have voted,decreed,and
sanctioned the following political constitution.
As a direct challenge to colonial authorities of the Spanish empire, the sovereignty was retroverted to
the people, a legal principle underlying the Philippine Revolution.The people delegate governmental
functions to civil servants while they retain actual sovereignty. The 27 articles of Title IV detail the
natural rights and popular sovereignty of Filipinos,the enumeration of which does not imply the
prohibition of any other rights not expressly stated.Title III,Article V,also declares that the State
recognizes the freedom and equality of all beliefs,as well as the separation of Church and State.These
are direct reactions to features of the Spanish government in the Philippines, where the friars were
dominant agents of the state.
Executive power was vested in the president,and elected bya constituent assembly of the Assembly of
Representatives and special representatives. The president will serve a term of four years without re-
election.There was
The 1899 Malolos Constitution was never enforced due to the ongoing war.The Philippines was
effectively a territory of the United States upon the signing of the Treaty of Paris between Spain and the
United States, transferring sovereignty of the Philippines on 10 December 1898.
It is worth mentioning that after the Treaty of Paris,the Philippines was subject to the power of the
United States of America,effectively the new colonizers of the country. From 1898 to 1901,the
Philippines will be placed under a military government, until a civil government will be put into place.
Two acts of the United States Congress were passed that may be considered to have qualities of
constitutionality.First is the Philippine Organic Act of 1902,the first organic law for the Philippine Islands
that provided for the creation of a popularly elected Philippine Assembly,and specified that legislative
power would be vested in a bicameral legislature composed of the Philippine Commission as the upper
house, and the Philippine Assembly as lower house. Key provisions of the Act included a bill of rights for
Filipinos and the appointment of two non-voting Filipino Resident Commissioner of the Philippines as
representative to the United States House of Representatives.The second Act that functioned as a
constitution is the Philippine Autonomy Act of 1916, commonly referred to as"Jones Law,"which
modified the structure of the Philippine government through the removal of the Philippine
Commission,replacing it with a Senate that served as the upper house and its members elected by the
Filipino voters,the first truly elected national legislature.It was also in this Act that explicitly declared the
purpose of the United States to end their sovereignty over the Philippines and recognize Philippine
independence as soon as a stable government can be established.
In 1932,with the efforts of the Filipino independence mission led by Sergio Osmena and Manuel
Roxas,the United States Congress passed the Hare-Hawes-Cutting Act with the premise of granting
Filipinos independence.The bill was opposed by then Senate President Manuel L. Quezon and
consequently, rejected by the Philippine Senate.
By 1934,another law, the Tydings-McDuffie Act,also known as the Philippine Independence Act,was
passed by the United States Congress
that provided authority and defined mechanisms for the establishment of a formal constitution by a
constitutional convention.The members of the convention were elected and held their first meeting on
30 July 1934,with Claro M.Recto unanimously elected as president.
The constitution was crafted to meet the approval of the United States government, and to ensure that
the US would live up to its promise to grant independence to the Philippines.
The Filipino people,imploring the aid of Divine Providence, in order to establish a government that shall
embody their ideals,conserve and develop the patrimony of the nation,promote the general welfare,and
secure to themselves and their posterity the blessings of independence under a regime of justice,
liberty, and democracy,do ordain and promulgate this constitution.
The constitution created the Commonwealth of the Philippines,an administrative body that governed
the Philippines from 1935 to 1946. It is a transitional administration to prepare the country toward its
full achievement of independence. It originally provided for a unicameral National Assembly with a
president and vice president elected to a six-year term without re-election. It was amended in 1940 to
have a bicameral Congress composed of a Senate and a House of Representatives,as well as the creation
of an independent electoral commission,and limited the term of office of the president and vice
president to four years, with one re-election. Rights to suffrage was originally afforded to male citizens
of the Philippines who are twenty-one years of age or over and are able to read and write;this was later
on extended to women within two years after the adoption of the constitution.
While the dominant influence in the constitution was American,it also bears traces of the Malolos
Constitution,the German,Spanish,Mexican constitutions,constitutions of several South American
countries,and the unwritten English Constitution.
The draft of the constitution was approved by the constitutional convention on 8 February 1935 and
ratified by then US President Franklin D.Roosevelt on 25 March 1935.Elections were held in September
1935 and Manuel L.Quezon was elected President of the Commonwealth.
1973:Constitutional Authoritarianism
In 1965,Ferdinand E. Marcos was elected president,and in 1967, Philippine Congress passed a resolution
callingfor a constitutional convention to change the 1935 Constitution.Marcos won the re-election in
1969, in a bid boosted by campaign overspending and use of government funds.Elections of the
delegates to the constitutional convention were held on 20 November 1970,and the convention began
formally on 1 June 1971,with former President Carlos P. Garcia being elected as convention
president.Unfortunately,he died,and was succeeded by another former president,Diosdado Macapagal.
Before the convention finished its work, martial law was declared. Marcos cited a growing communist
insurgency as reason for the martial law,which was provided for in the 1935 Constitution.Some
delegates of the ongoing constitutional convention were placed behind bars and others went into hiding
or voluntary exile.With Marcos as dictator,the direction of the convention turned,with accounts that the
president himself dictated some provisions of the constitution, manipulating the document to be able to
hold on to power for as long as he can.On 29 November 1972,the convention approved its proposed
constitution.
President Marcos issued Presidential Decree No.73 setting the date of the plebiscite to ratify or reject
the proposed constitution on 30 November 1973.This plebiscite was postponed later on,since Marcos
feared that the public might vote to reject the constitution.Instead of a plebiscite,Citizen Assemblies
were held,from 10-15 January 1973,where the citizens,coming
together and voting by hand,decided on whether to ratify the constitution, suspend the convening of
the Interim National Assembly,continue martial law,and place a moratorium on elections for a period of
at least several years. The President,on 17 January 1973,issued a proclamation announcing that the
proposed constitution has been ratified by an overwhelming vote of the members of the highly irregular
Citizen Assemblies.
After all the amendments introduced,the 1973 Constitution was merely a way for the President to keep
executive powers, abolish the Senate, and,by no means,never acted as a parliamentary system,but
instead,functioned as an authoritarian presidential system,with all the real power concentrated in the
hands of the president,with the backing of the constitution.
The situation in the 1980s has been very turbulent.As Marcos amassed power,discontent has also been
burgeoning.The tide turned swiftly when in August 1983, Benigno Aquino Jr., opposition leader and
regarded as the most credible alternative to President Marcos,was assassinated while under military
escort immediately after his return from exile in the United States. There was widespread suspicion that
the orders to assassinate Aquino came from the top levels of the government and the military.This event
caused the coming together of the non-violent opposition to the Marcos authoritarian regime.Marcos
was then forced to hold "snap" elections a year early,and said elections were marred by widespread
fraud.Marcos declared himself winner,despite international condemnation and nationwide protests.A
small group of military rebels attempted to stage a coup,but failed;however, this triggered what came to
be known as the EDSA People Power Revolution
of 1896, as people from all walks of life spilled onto the streets.Under pressure from the United States
of America,who used to support Marcos and his martial law,the Marcos family fled into exile.His
opponent in the snap elections,Benigno Aquino Jr.'s widow,Corazon Aquino,was installed as president
on 25 February 1986.
President Corazon Aquino's government had three options regarding the constitution:revert to the 1935
Constitution,retain the 1973 Constitution and be granted the power to make reforms, or start anew and
break from the "vestiges of a disgraced dictatorship.” They decided to make a new constitution to
that,according to the president herself, should be “truly reflective of the aspirations and ideals of the
Filipino people.”
In March 1986,President Aquino proclaimed a transitional constitution to last for a year while a
Constitutional Commission drafted a permanent constitution.This transitional constitution,called the
Freedom Constitution, maintained many provisions of the old one, including in rewritten form the
presidential right to rule by decree. In 1986,a constitutional convention was created,composed of 48
members appointed by President Aquino from varied backgrounds and representations. The convention
drew up a permanent constitution,largely restoring the set-up abolished by Marcos in 1972,but with
new ways to keep the president in check, a reaction to the experience of Marcos rule.The new
constitution was officially adopted on 2 February 1987.
The Constitution begins with a preamble,and eighteen self-contained articles.It established the
Philippines as a "democratic republican State" where "sovereignty resides in the people and all
government authority emanates from them."It allocates governmental powers among the executive,
legislative, and judicial branches of the government.
The Executive branch is headed by the president and his cabinet,whom he appoints.The president is the
head of the state and the chief executive, but his power is limited by significant checks from the two
other co-equal branches of government, especially during times of emergency. This is put in place to
safeguard the country from the experience of martial law despotism during the presidency of Marcos. In
cases of national emergency,the president may still declare martial law,but not longer than a period of
sixty days.Congress,through a majority vote,can revoke this decision,or extend
it for a period that they determine. The Supreme Court may also review the declaration of martial law
and decide if there were sufficient justifying facts for the act. The president and the vice president are
elected at large by a direct vote, serving a single six-year term.
The legislative power resides in a Congress divided into two Houses: the Senate and the House of
Representatives.The 24 senators are elected at large by popular vote, and can serve no more than two
consecutive six-year terms.The House is composed of district representatives representing a particular
geographic area,and make up around 80% of the total number of representatives.There are 234
legislative districts in the Philippines that elect their representatives to serve three-year terms.The 1987
Constitution created a party-list system to provide spaces for the participation of under-represented
community sectors or groups. Party-list representatives may fill up not more than 20% of the seats in
the House.
Aside from the exclusive power of legislation,Congress may also declare war,through a two-thirds vote
in both upper and lower houses.But the power of legislation,however,is also subject to an executive
check, as the president retains the power to veto or stop a bill from becoming a law. Congress may only
override this power with a two-thirds vote in both houses.
The Philippine Court system is vested with the power of the judiciary, and is composed of a Supreme
Court and lower courts as created by law.The Supreme Court is a 15-member court appointed by the
president without the need to be confirmed by Congress. The appointment the president makes,
however, is limited to a list of nominees provided by a constitutionally specified Judicial and Bar
Council.The Supreme Court Justices may hear, on appeal, any cases dealing with the constitutionalityof
any law,treaty,or decree of the government, cases where questions of jurisdiction or judicial error are
concerned,or cases where the penalty is sufficiently grave.It may also exercise original jurisdiction over
cases involving government or international officials.The Supreme Court also is charged with overseeing
the functioning and administration of the lower courts and their personnel.
The Constitution also established three independent Constitutional Commissions,namely:the Civil
Service Commission, a central agency in charge of government personnel; the Commission on
Elections,mandated to enforce and administer all election laws and regulations;and the Commission on
Audit,which examines all funds,transactions,and property accounts of the government and its agencies.
To further promote the ethical and lawful conduct of the government, the Office of the Ombudsman
was created to investigate complaints that pertain to public corruption, unlawful behavior of public
officials,and other public misconduct.The Ombudsman cancharge public officials before the
Sandiganbayan,a special court created for this purpose.
Only the House of Representatives can initiate the impeachment of the'president,members of the
Supreme Court,and other constitutionally protected public officials such as the Ombudsman. The Senate
will then try the impeachment case. This is another safeguard to promote moral and ethical conduct in
the government.
The 1987 Constitution provides for three waysby which the Constitution can be amended,all requiring
ratification by a majority vote in a national referendum.These modes are a Constituent Assembly,a
People's Initiative, or a Constitutional Convention.Using these modes,there were efforts to amend or
change the 1987 Constitution,starting with the presidency of Fidel V.Ramos who succeeded Corazon
Aquino.The first attempt was in 1995, when then Secretary of National Security Council Jose Almonte
drafted a constitution,but it was exposed to the media and it never prospered.The second effort
happened in 1997, when a group called PIRMA,hoped to gather signatures from voters to change the
constitution through a people's initiative.Many were against this, including then Senator Miriam
Defensor-Santiago,who brought the issue to court and won-with the Supreme Court judging that a
people's initiative cannot push through without an enabling law.
The succeeding president,Joseph Ejercito Estrada, formed a study commission to investigate the issues
surrounding charter change focusing on the economic and judiciary provisions of the constitution.This
effort was also blocked by different entities.After President Estrada was replaced by another People
Power and succeeded byhis Vice-President,Gloria Macapagal-Arroyo,then House Speaker Jose de
Venecia endorsed constitutional change through a Constituent Assembly,which entails a two-thirds vote
of the House to propose amendments or revision to the Constitution.This initiative was also not
successful,since the term of President Arroyo was mired in controversy and scandal, including the
possibility of Arroyo extending her term as president,which the Constitution does not allow.
The administration of the succeeding president, Benigno Aquino III, had no marked interest in charter
change,except those emanating from different members of Congress,including the Speaker of the
House,Feliciano Belmonte Jr.,who attempted to introduce amendments to the Constitution that concern
economic provisions that aim toward liberalization.This effort did not see the light of day.
In an upsurge of populism,President Rodrigo Duterte won the 2016 presidential elections in a campaign
centering on law and order,proposing to reduce crime by killing tens of thousands of criminals. He also is
a known advocate of federalism, a compound mode of government combining a central or federal
government with regional governments in a single political system. This advocacy is in part an influence
of his background, being a local leader in Mindanao that has been mired in poverty and violence for
decades.On 7 December 2016,President Duterte signed an executive order creating a consultative
committee to review the 1987 Constitution.
Agrarian reform is essentially the rectification of the whole system of agriculture,an important aspect of
the Philippine economy because nearly half of the population is employed in the agricultural sector,and
most citizens live in rural areas.Agrarian reform is centered on the relationship between production and
the distribution of land among farmers. It is also focused on the political and economic class character of
the relations of production and distribution in farming and related enterprises,and how these connect to
the wider class structure.Through genuine and comprehensive agrarian reform,the Philippines would be
able to gain more from its agricultural potential and uplift the Filipinos in the agricultural sector,who
have been, for the longest time, mired in poverty and discontent.
In our attempt to understand the development of agrarian reform in the Philippines, we turn our
attention to our country's history,especially our colonial past,where we could find the root of the
agrarian woes the country experiences up to this very day.
When the Spaniards colonized the country,they brought with them a system of pueblo agriculture,
where rural communities, often dispersed and scattered in nature,were organized into a pueblo and
given land to cultivate.
Families were not allowed to own their land-the King of Spain owned the land,and Filipinos were
assigned to these lands to cultivate them,and they pay their colonial tributes to the Spanish
authorities in the form of agricultural products.
Later on,through the Law of the Indies,the Spanish crown awarded tracts of land to(1)religious orders;
(2) Spanish military as repartamientos or reward for their service; and(3)Spanish encomenderos,those
mandated to manage the encomienda or the lands given to them, where Filipinos worked and paid
their tributes to the encomendero.Filipinos were not given the right to own land,and only worked in
them so that they may have a share of the crops and pay tribute.The encomienda system was an
unfair and abusive system, as “compras y vandalas" became the norm for the Filipino farmers working
the land-they were made to sell their products at a very low price, or surrender their products to the
encomenderos,who resell this at a profit.Filipinos in the encomienda were also required to render
services to their encomenderos that are unrelated to farming.
From this encomienda system, the hacienda system developed in the beginning of the 19th century,as
the Spanish government implemented policies that would fast track the entry of the colony into the
capitalist world.The economy was tied to the world market, as the Philippines became an exporter of
raw materials and importer of goods.Agricultural exports were demanded and the hacienda system
was developed as a new form of ownership.In the 1860s,Spain enacted a law ordering landholders to
register their landholdings, and only those who knew benefitted from this.Lands were claimed and
registered in other people's names, and many peasant families who were “assigned" to the land in the
earlier days of colonization were driven out,or forced to come under the power of these people who
claimed rights to the land because they held a title.
This is the primary reason why revolts in the Philippines were oftentimes agrarian in nature. Before
the colonization, Filipinos had communal ownership of land.The system introduced by the Spaniards
became a bitter source of hatred and discontent for the Filipinos.Religious orders,the biggest
landowners in the Philippines, also became a main source of abuse and exploitation for the
Filipinos,increasing the rent paid by the Filipinos on a whim.
Filipinos fought the Philippine Revolution in a confluence of motivations, but the greatest desire for
freedom would be the necessity of owning land. Upon the end of the Philippine Revolution,the
revolutionary government
will declare all large landed estates, especially the friar lands,confiscated, and became government
property.However,the first Philippine republic was short-lived.The entrance of the Americans will
signal a new era of colonialism and imperialism in the Philippines.
The Americans were aware that the main cause of social unrest in the Philippines is landlessness,and
they attempted to put an end to the deplorable conditions of the tenant farmers by passing several
land policies to increase the small landholders and distribute ownership to a bigger number of Filipino
tenants and farmers. The Philippine Bill of 1902 provided regulations on the disposal of public lands. A
private individual may own 16 hectares of land while corporate landholders may have 1,024
hectares.Americans were also given rights to own agricultural lands in the country.The Philippine
Commission also enacted Act No.496 or the Land Registration Act,which introduced the Torrens
system to address the absence of earlier records of issued land titles and conduct accurate land
surveys.In 1903,the homestead program was introduced,allowing a tenant to enter into an
agricultural business by acquiring a farm of at least 16 hectares.This program,however,was limited to
areas in Northern Luzon and Mindanao,where colonial penetration has been difficult for Americans, a
problem they inherited from the Spaniards.
Landownership did not improve during the American period; in fact,it even worsened,because there is
no limit to the size of landholdings people can possess,and the accessibility of possession was limited
to those who can afford to buy,register, and acquire fixed property titles. Not all friar lands acquired
by the Americans were given to landless peasant farmers. Some lands were sold or leased to
American and Filipino business interest.This early land reform program was also implemented
without support mechanisms-if a landless peasant farmer received land,he only received land,nothing
more. Many were forced to return to tenancy,and wealthy Filipino hacienderos purchased or
forcefully took over lands from farmers who cannot afford to pay their debts. The system introduced
by the Americans enabled more lands to be placed under tenancy, and led to widespread peasant
uprisings, such as the Colorum and Sakdal Uprising in Luzon. Peasants and workers found refuge from
millenarian movements that gave them hope that change could still happen through militancy.
During the years of the Commonwealth government,the situation further worsened,as peasant uprisings
increased and landlord-tenant relationship became more and more disparate. President Quezon laid
down a social justice program focused on the purchaseof haciendas,which were to be divided and sold
to tenants. His administration also created the National Rice and Corn Corporation (NARICC) to assign
public defenders to assist peasants in court battles for their rights to the land,and the Court of Industrial
Relations to exercise jurisdiction over disagreements arising from landowner-tenant relationship. The
Homestead Program also continued,through the National Land Settlement Administration (NLSA).
Efforts toward agrarian reform by the Commonwealth failed because of many problems such as budget
allocation for the settlement program and widespread peasant uprisings. World War II put a halt to all
interventions to solve these problems,as the Japanese occupied the country.
Rehabilitation and rebuilding after the war was focused on providing solutions to the problems of the
past.The administration of President Roxas passed Republic Act No.34 to establish a 70-30 sharing
arrangement between tenant and landlord,respectively,and reduced the interest of landowners' loans
to tenants at six percent or less.The government also attempted to redistribute hacienda lands,falling
prey to the woes of similar attempts since no support was given to small farmers who were sold lands.
Under the term of President Elpidio Quirino,the Land Settlement Development Corporation(LASEDECO)
was established to accelerate and expand the resettlement program for peasants. This agency later on
became the National Resettlement and Rehabilitation Administration(NARRA) under the administration
of President Ramon Magsaysay.
Magsaysay saw the importance of pursuing genuine land reform program and convinced Congress,
majority of which are landed elites,to pass legislation to improve the land reform situation.Republic Act
No.1199 or the Agricultural Tenancy Act was passed to govern the relationship between landholders and
tenant farmers,protecting the tenurial rights of tenants and enforced tenancy practices.Through this
law,the Court of Agricultural Relations was created in 1955 to improve tenancy security,fix land rentals
of tenanted farms and resolve land disputes filed by the landowners and peasant organizations.The
Agricultural Tenancy Commission was also established to administer problems created by tenancy.The
Agricultural Credit and
Cooperative Financing Administration (ACCFA)was also created mainly to provide warehouse facilities
and assist farmers in marketing their products. The administration spearheaded the establishment of
the Agricultural and Industrial Bank to provide easier terms in applying for homestead and other
farmlands.
NARRA accelerated the government’s resettlement program and distribution of agricultural lands to
landless tenants and farmers. It also aimed to convince members of the Huks, a movement of rebels in
Central Luzon,to resettle in areas where they can restart lives as peaceful citizens.
Despite a more vigorous effort toward agrarian reform,the situation for the farmers remained dire,since
the government lacked funds and provided inadequate support services for the programs. The landed
elite did not fully cooperate and criticized the programs.
A major stride in land reform arrived during the term of President Diosdado Macapagal through the
Agricultural Land Reform Code(Republic Act No.3844).
Source:Section 2 of RA 3844
(1)To establish owner-cultivatorship and the economic family-size farm as the basis of Philippine
agriculture and,as a consequence,divert landlord capital in agriculture to industrial development;
(2)To achieve a dignified existence for the small farmers free from pernicious institutional restraints and
practices;
(3) To create a truly viable social and economic structure in agriculture conducive to greater productivity
and higher farm incomes;
(4)To apply all labor laws equally and without discrimination to both industrial and agricultural wage
earners;
(5)To provide a more vigorous and systematic land resettlement program and public land
distribution;and
(6) To make the small farmers more independent, self-reliant and responsible citizens,and a source of
genuine strength in our democratic society.
This Code abolished share tenancy in the Philippines and prescribed program to convert tenant-farmers
to lessees and later on owner-cultivators. Italso aimed tofree tenants from tenancyandemphasizeowner-
cultivatorship and farmer independence, equity, productivity improvement, and public land
distribution.Despite being one of the most comprehensive pieces of land reform legislation ever passed
in the Philippines,Congress did not make any effort to come up with a separate bill to fund its
implementation,despite the fact that it proved beneficial in the provinces where it was pilot tested.
President Marcos declared martial law in 1972,enabling him t essentially wipe out the landlord-
dominated Congress.Through his "technocrats,"he was able to expand executive power to start a
"fundamental restructuring"of government,including its efforts in solving the deep structural problems
of the countryside.Presidential Decree No.27,or the Code of Agrarian Reform of the Philippines,became
the core of agrarian reform during Marcos regime.
This shall apply to tenant farmers of private agricultural lands primariy devoted to rice and corn under a
system of sharecrop or lease-tenancy whether classified as landed estate or not;
The tenant farmer,whether in land classified as landed estate or noc shall be deemed owner of a portion
constituting a family-size farm five(5)hectares if not irrigated and three (3) hectares if irrigated;
In all cases,the landowner may retain an area of not more than seves (7)hectares if such landowner is
cultivating such area or will now cultivate it;
For the purpose of determining the cost of the land to be transferred the tenant-farmer pursuant to this
Decree,the value of the land shat be equivalent to two and one-half(2 1/2)times the average harvest
three normal crop years immediately preceding the promulgation this Decree;
The total cost of the land,including interest at the rate of six(6) centum per annum, shall be paid by the
tenant in fifteen(15)years fifteen(15)equal annual amortizations;
In case of default,the amortization due shall be paid by the farmers’ cooperative in which the defaulting
tenant-farmer is a member,with the cooperative having a right of recourse against him;
The government shall guaranty such amortizations with shares of stock in government-owned and
government-controlled corporations;
No title to the land owned by the tenant-farmers under this Decree shall be actually issued to a tenant-
farmer unless and until the tenant-farmer has become a full-fledged member of a duly recognized
farmer’s cooperative;
Title to land acquired pursuant to this Decree or the Land Reform Program of the Government shall not
be transferable except by hereditary succession or to the Government in accordance with the provisions
of this Decree,the Code of Agrarian Reforms and other existing laws and regulations;
The Department of Agrarian Reform through its Secretary is hereby empowered to promulgate rules and
regulations for the implementation of this Decree.
“Operation Land Transfer” on lands occupied by tenants of more than seven hectares on rice and corn
lands commenced,and through legal compulsion and an improved delivery of support services to small
farmers,agrarian reform seemed to be finally achievable.Under the rice self-sufficiency program
“Masagana ’99,” farmers were able to borrow from banks and purchase three-hectare plots of lands and
agricultural inputs. However,the landlord class still found ways to circumvent the law.Because only rice
lands were the focus of agrarian reform,some landlords only needed to change crops to be exempted
from the program,such as coconut and sugar lands.Lands worked by wage labor were also exempt from
the program,so the landed elite only had to evict their tenants and hired workers instead. Landlessness
increased, which made it all the more difficult for the program to succeed because landless peasants
were excluded from the program.Many other methods were employed by the elite to find a way to
maintain their power and dominance,which was worsened by the corruption of Marcos and his cronies
who were also involved in the agricultural sector.
Theoverthrow of Marcos and the 1987 Constitution resulted to a renewed interest and attention to
agrarian reform,as President Corazon Aquino envisioned agrarian reform to be the centerpiece of her
administration’s social legislation,which proved difficult because her background betrayed her-she
comes from a family of a wealthy and landed clan that owns Hacienda Luisita.
On 22 July 1987,Aquino issued Presidential Proclamation 131 and Executive Order 229,which outlined
her land reform program.In 1988,the Congress passed Republic Act No.6657,or the Comprehensive
Agrarian Reform Law(CARL),which introduced the program with the same name (Comprehensive
Agrarian Reform Program or CARP). It enabled the redistribution of agricultural lands to tenant-farmers
from landowners,who were paid in exchange by the government through just compensation,and
allowed them to retain not more than five hectares.Corporate landowners were,however,allowed under
law to voluntarily divest a proportion of their capital stock,equity,or participation in favor of their
workers or other qualified beneficiaries instead of turning over their land to the government.
CARP was limited because it accomplished very little during the administration of Aquino.It only
accomplished 22.5% of land distribution in six years owing to the fact that Congress,dominated by the
landed elite,was unwilling to fund the high compensation costs of the program.It was also mired in
controversy,since Aquino seemingly bowed down to the pressure of her relatives by allowing the stock
redistribution option.Hacienda Luisita reorganized itself into a corporation and distributed stocks to
farmers.
Under the term of President Ramos,CARP implementation was speeded in order to meet the ten-year
time frame,despite limitations and constrainte in funding,logistics,and participation of involved sectors.
By 1996,the Department of Agrarian Reform(DAR) distributed only 58.25% of the total area target to be
covered by the program. To address the lacking funding and the dwindling time for the implementation
of CARP,Ramos signed Republic Act No.8532 in 1998 to amend CARL and extend the program to another
ten years.
The new deadline of CARP expired in 2008,leaving 1.2 million farmer beneficiaries and 1.6 million
hectares of agricultural land to be distributed to farmers.In 2009,President Arroyo signed Republic Act
No.9700 or the Comprehensive Agrarian Reform Program Extension with Reforms (CARPER),the
amendatory law that extended the deadline to five more years. Section 30 of the law also mandates that
any case and/or proceeding involving implementation of the provisions of CARP, as amended,which may
remain pending on 30 June 2014 shall be allowed to proceed to its finality and executed even beyond
such date.
From 2009 to 2014,CARPER has distributed a total of 1 million hectares of land to 900,000 farmer
beneficiaries.After 27 years of land reform and two Aquino administrations,500,000 hectares of lands
remain undistributed.The DAR and the Department of Environment and Natural Resources(DENR) are
the government agencies mandated to fulfill CARP and CARPER,but even the combined effort and
resources of the two agencies have proved incapable of fully achieving the goal of agrarian reform in the
Philippines.The same problems have plagued its implementation: the powerful landed elite,and the
ineffectual bureaucracy of the Philippine government.Until these two challenges are
surmounted,genuine agrarian reform in the Philippines remains but a dream to Filipino farmers who
have been fighting for their right to landownership for centuries.
In today's world,taxation is a reality that all citizens must contend with,for the primary reason that
governments raise revenue from the people they govern to be able to function fully.In exchange for the
taxes that people pay,the government promises to improve the citizens' lives through good
governance.Taxation,as a government mechanism to raise funds,developed and evolved through time,
and in the context of the Philippines,we must understand that it came with our colonial experience.
The Philippines may have abundant natural resources even before the encroachment of the
Spaniards,but our ancestors were mainly involved in a subsistence economy,and while the payment of
tribute or taxes (buhis/ buwis/handug) or the obligation to provide labor services to the datus in some
early Filipino communities in the Philippines may resemble taxation, it is essentially different from the
contemporary meaning of the concept.
The arrival of the Spaniards altered this subsistence system becau they imposed the payment of tributos
(tributes) from the Filipinos,similar to what has been practiced in all colonies in America. The purpose is
te generate resources to finance the maintenance of the islands,such as salaries of government officials
and expenses of the clergy.The difficulty faced by th Spaniards in revenue collection through the tribute
was the dispersed nature of the settlements,which they solved by introducing the system of reduccia by
creating pueblos,where Filipinos were gathered and awarded plots land to till.Later on, the settlements
will be handled by encomenderos wh received rewards from the Spanish crown for their
services.Exempted from payment of tributos were the principales: alcaldes,gobernadores,cabeza de
barangay,soldiers,members of the civil guard,government officials,a vagrants.
The Filipinos who were once satisfied with agricultural production f subsistence,had to increase
production to meet the demands of paymenta and a more intensive agricultural system had to be
introduced.Later on half of the tribute was paid in cash,and the rest with produce.This finances the
conquest of the Philippines.
Toward the end of the 16th century,the Manila-Acapulco trade established through the galleons, a way
by which the Spaniards could ma sure that European presence would be sustained.Once a year the
galleonw be loaded up with merchandise from Asia and sent to New Spain (Mexi and back.This
improved the economy of the Philippines and reinforcedh control of the Spaniards all over the
country.Tax collection was still ve poor,and subsidy from the Spain will be needed through the situado
re delivered from the Mexican treasury to the Philippines through the gallecme This subsidy stopped as
Mexico became independent in 1820.
In 1884, the payment of tribute was put to a stop and was replaced a poll tax collected through a
certificate of identification called the céda personal.This is required from every resident and must be
carried wh traveling.Unlike the tribute,the payment of cedulas is by person. by family.Payment of the
cedula is progressive and according to inc categories.This system,however,was a heavy burden for the
peasants was easy for the wealthy.But because of this,revenue collection grea increased and became
the main source of government income.The Chine in the Philippines were also made to pay their a
discriminatory cedula whi is bigger than what the Filipinos pay.
Two direct taxes were added in 1878 and imposed on urban income Urbana is a tax on the annual rental
value of an urban real estate,
industria is a tax on salaries, dividends, and profits. These taxes were universal and affected all kinds of
economic activity except agriculture, which was exempt to encourage growth.
Indirect taxes such as customs duties were imposed on exports and imports to further raise revenue,
especially during the 19th century when economic growth increased exponentially. There were no
excise taxes collected by the Spaniards throughout the years of colonialism.
The colonial government also gains income from monopolies,such as the sale of stamped paper,
manufacture and sale of liquor, cockpits,and opium,but the biggest of the state monopolies was
tobacco, which began in 1781 and halted in 1882. Only certain areas were assigned to cultivate
tobacco,which the government purchases at a price dictated to the growers. This monopoly madeit
possible for the colony to create a surplus of income that made it self-sufficient without the need for the
situado real and even contributes to the treasury of Spain.
Forced labor was a character of Spanish colonial taxation in the Philippines, and was required from the
Filipinos.It proved useful in defending the territory of the colony and augmenting the labor required by
woodcutting and shipbuilding especially during the time of the galleon trade. Through the polo system,
male Filipinos were obliged to serve,a burden that resulted to an increase in death rate and flight to the
mountains,which led to a decrease in population in the 17th century. This changed later on,as polos and
servicios became lighter, and organized at the municipal level. Labor provided was used in public works,
such as the building of roads and bridges.Some were made to servethe municipal office, or as night
guards.
Males were required to provide labor for 40 days a year (reduced to 15 days a year in 1884).They may
opt out by paying the fallas of three pesos per annum,which was usually lost to corruption because it
was collected at the municipal level, and were known as caidas or droppings. The polos will be called
prestación personal (personal services) by the second half of the 19th century.
Taxation in the Philippines during the Spanish colonial period was characterized by the heavy burden
placed on the Filipinos,and the corruption of the principales, or the former datus and local elites who
were co-opted by the Spaniards to subjugate and control the natives on their behalf.The principales who
were given positions such as cabezas de barangay or alcaldes in the local government were able to
enrich themselves by pocketing tributos and/or falls, while the peasants were left to be abused.Taxation
appeared
progressive but the disparity between the less taxed principales and the
heavily taxed peasants made the rich richer and the poor poorer.
Source:Mariano Herbosa to Jose Rizal,Calamba,29 August 1886 Letters Between Rizal and Family
Members (Manila:National Heroes Commission,1964),239-241.
"The tax! With regard to your question on this,the answer is very long as it is the cause of the prevailing
misery here. What I can write you wi be only one-half of the story and even Dumas,senior,cannot
exhause the subject.Nevertheless,I'll try to write what I can,though I may net be able to give a complete
story,you may at least know half of it.
"Here,there are many kinds of taxes.What they call irrigated rice land even if it has no water, must pay a
tax of 50 cavanes of palay(unhusked rice), and land with six cavanes of seed pay 5 pesos in cash.The lane
they call dry land that is planted to sugar cane,maize,and others pay different rates. Even if the agreed
amount is 30 pesos for land with six cavanes of seed,if they see that the harvest is good,they increase
the tax,but they don't decrease it,if the harvest is poor.There is lane whose tax is 25 pesos or 20 pesos,
according to custom.
"The most troublesome are the residential lots in the town.There is fixed rule that is followed,only their
whim.Hence,even if it is only cne span in size,ifa stone wall is added,50 pesos must be paid,the lowess
being 20 pesos.But a nipa or cogon house pays only one peso for area of ten fathoms square.Another
feature of this system is that m the day you accept the conditions,the contract will be written which
cannot be changed for four years,but the tax is increased every ye For these reasons,for two years now
the payment of tax is confuse and little by little the fear of the residents here of the word "vacam is
being dispelled,which our ancestors had feared so much.The resui is bargaining,like they do in buying
fish. It is advisable to offeralom figure and payment can be postponed, unlike before when people we
very much afraid to pay after May.
"I'm looking for a receipt to send you, but I cannot find any,because don't get a receipt every time we
pay. Anyway it is value-less as it d not state the amount paid; it only says that the tax for that year w
paid,without stating whether it is five centavos,twenty-five centave one hundred,or one thousand
pesos. The residents who ask or get th
said receipt accept it with closed eyes.The receipt has no signature in the place where the amount paid
ought to be,although it bears their name.Until now I cannot comprehend why some are signed and
others are not. This is more or less what is happening here in the payment of the land tax and it has
been so for many years since I can remember.
“Besides this, the taxes on the plants in the fields that are far from the town,like the land in Pansol, are
various. The tax on the palay is separate from the tax on maize, mongo, or garlic. There is no limit to this
tax,for they fix it themselves.Since July no one buys sugar and since June locusts are all over the town
and they are destroying palay and sugar cane,which is what we regret here.The governor gave 50 pesos
to pay the catchers of locusts, but when they took them to the town hall they were paid only 25 cents a
cavan and a half; and it seems that the locusts are not decreasing.According to the guess of the
residents here only 300 cavanes of locusts have been caught in this town.Many still remain.Though the
governor has not sent any more money,the people have not stopped catching them.”
The Americans who acquired the Philippines aimed to make the economy self-sufficient by running the
government with the smallest possible sum of revenue and create surplus in the budget.From 1898 to
1903,the Americans followed the Spanish system of taxation with some modifications,noting that the
system introduced by the Spaniards were outdated and regressive.The military government suspended
the contracts for the sale of opium,lottery, and mint charges for coinage of money. Later on the urbana
will be replaced by tax on real estate,which became known as the land tax.The land tax was levied on
both urban and rural real estates.
The problem with land tax was that land titling in the rural area was very disorderly, the appraising of
land value was influenced by political and familial factors,and the introduction of a taxation system on
agricultural land faced objections from the landed elite.Tax evasion was prevalent, especially among the
elites.
The Internal Revenue Law of 1904 was passed as a reaction to the problems of collecting land tax.It
prescribed ten major sources of revenue:(1) license taxes on firms dealing in alcoholic beverages and
tobacco,(2)excise taxes on alcoholic beveragesand tobacco products,(3) taxes on banks and
87
The cedula went through changes in the new law as the rate was fixed per adult male,which resulted to
a great decline in revenues.In 1907,some provinces were authorized to double the fee for the cedula to
support the construction and maintenance of roads. The industria tax was levied on the business
community and became a highly complex system that assigned a certain tax to an industrial or
commercial activity according to their profitability.The new Act also imposed a percentage tax on sales
payable quarterly.
In 1913,the Underwood-Simmons Tariff Act was passed,resulting toa reduction in the revenue of the
government as export taxes levied on sugar tobacco,hemp,and copra were lifted.To make up for the
loss,then Governar General Francis Burton Harrison urged that tax receipts be increased to make up for
the loss. Minor changes were made to the 1904 Internal Revenue Act such as the imposition of taxes on
mines,petroleum products. and dealers of petroleum products and tobacco.
New sources of taxes were introduced later on.In 1914,an income tar was introduced,in 1919,an
inheritance tax was created,and in 1932, national lottery was established to create more revenue for the
government However,these new creations were not enough to increase government revenues,
New measures and legislation were introduced to make the taxation system appear more equitable
during the Commonwealth.Income tax rates were increased in 1936, adding a surtax rate on individual
net incomes i excess of 10,000 pesos. Income tax rates of corporations were also increased In 1937,the
cedula tax was abolished,which appeared to be a progressive move;but in 1940 a residence tax was
imposed on every citizen aged 18 years old and on every corporation.
In 1939,the Commonwealth government drafted the National Internal Revenue Code,introducing major
changes of the new tax system,as follows
1. The normal tax of three percent and the surtax on income war replaced by a single tax at a
progressive rate.
3. Corporation income tax was slightly increased by introducing taxes on inherited estates or gifts
donated in the name of dead persons.
4. The cumulative sales tax was replace by a single turnover tax of 10% on luxuries.
The introduced tax structure was an improvement of the earlier system introduced by the
Americans,but still remained inequitable.The lower class still felt the bulk of the burden of taxation,
while the upper class,the landed elite,the people in political positions,were able to maneuver the
situation that will benefit them more. The agriculture sector was still taxed low to promote growth,but
there was no incentive for industrial investment to take root and develop.
Finally,a common character of taxation during the American occupation in the Philippines was that it
was not used to diversify the economy or direct economic development,as some sectors still carried the
disproportionate share of the tax burden.
As World War II reached the Philippine shores, economic activity was put to a stop, and the Philippines
bowed to a new set of administrators,the Japanese.The Japanese military administration in the
Philippines during World War II immediately continued the system of tax collection introduced during
the Commonwealth, but exempted the articles belonging to the Japanese armed forces.Foreign trade
fell,and the main sources of taxation came from amusements,manufactures,professions,and business
licenses. As the war raged,tax collection was a difficult task, and additional incomes of the government
were derived from the sales of the National Sweepstakes and sale of government bonds.
The expenditure of the Japanese military government grew greatly, and they issued military notes in
order to cover the costs of the war.
Chapter 4|Social,Political,Economic,and Cultural Issues in Philippine History 89
The impact of the war on the Philippine economy was effectively disparate,as Manila,the capital,was
razed to the ground while the rest f the Philippines was relatively untouched.But the highly agriculture-
baser economy was disrupted.The United States may have declared the Philippines independent,but,as
the country needed rehabilitation funds from the United States, the dependency of the Philippines to
the Americans was a opportunity to be taken advantage by the former colonial administrators The
economic situation was so problematic that by 1949,there was a severe lack of funds in many aspects of
governance,such as the military and education sectors.No efforts were made to improve tax
collection,and the United States advised the adoption of direct taxation.The administration of President
Manuel Roxas declined the proposal because it did not want alienate its allies in Congress.
The impetus for economic growth came during the time of Preside Elpidio Quirino through the
implementation of import and exchang controls that led to import substitution development.This policy
allower for the expansion of a viable manufacturing sector that reduced economi dependence on
imports.New tax measures were also passed,which included higher corporate tax rates that increased
government revenues-tax revene in 1953 increased twofold compared to 1948,the year when Quirino
firs assumed presidency.
While the succeeding presidencies of Magsaysay,Garcia,and Macapag promised to study the tax
structure and policy of the country(through the creation of a Tax Commission in 1959 by means of
Republic Act 2211) make way for a more robust and efficient tax collection scheme,post-wan fiscal
policy remained regressive,characterized by the overburdening of the lowest classes while the landed
elite who held business interests were in Congress to ensure that taxes will not be levied to them who
belong to the higher classes of society. The period of the post-war republic also saw a rise in
corruption.From 1959 to 1968,Congress did not pass any tax legislatin despite important changes in the
economy,and the vested interests Filipino businessmen in Congress will manifest in many instances such
the rejection of taxes on imports. Indirect taxation still contributed to three quarters of tax
revenues,and the Omnibus Tax Law of 1969 did not increae the ratio of income tax to general tax
revenue.Collection of taxes remaines poor, tax structure is still problematic,and much of public funds
were lost corruption,which left the government incapable of funding projects geare toward
development.
Under the Marcos authoritarian regime,the tax system remained regressive.During the latter part of the
Marcos years(1981-1985),the tax system was still heavily dependent on indirect taxes, which made up
70% of total tax collection.The tax system also remained unresponsive.Taxes grew at an average annual
rate of 15% and generated a low tax yield. Tax effort, defined as the ratio between the share of the
actual tax collection in gross domestic product and predictable taxable capacity, was at a low 10.7%.
As Corazon Aquino took the helm of the government after the EDSA Revolution,she reformed the tax
system through the 1986 Tax Reform Program.The aim was to improve the responsiveness of the tax
system, promote equity by ensuring that similarly situated individuals and firms bear the same tax
burden, promote growth by withdrawing or modifying taxes that reduce incentives to work or produce,
and improve tax administration by simplifying the tax system and promoting tax compliance.
A major reform in the tax system introduced under the term of Aquino was the introduction of the
value-added tax(VAT),with the following features:
a. uniform rate of 10% on sale of domestic and imported goods and services and zero percent on
exports and foreign-currency denominated sales;
b. ten(10)percent in lieu of varied rates applicable to fixed taxes(60 nominal rates), advance sales
tax, tax on original sale,subsequent sales tax,compensating tax, miller’s tax, contractor’s tax,broker’s
tax,film lessors and distributor’s tax, excise tax on solvents and matches,and excise tax on processed
videotapes;
c. two percent tax on entities with annual sales or receipts of less than P200,000;
d. adoption of tax credit method of calculating tax by subtracting tax on inputs from tax on gross
sales;
e. exemption of the sale of basic commodities such as agriculture and marine food products in
their original state,price-regulated petroleum products,and fertilizers;and
f.additional 20%tax on non-essential articles such jewelry,perfumes, toilet waters,yacht and other
vessels for pleasure and sports.
The VAT law was signed in 1986 and put to effect in 1988.While it was a reliable source of revenue for
the government, new tax laws would reduce its reliability,as legislated exemptions grew.
Lease of residential units with monthly rental per unit of not more than P8,000,subject to adjustment
using CPI
The succeeding term of President Joseph Estrada in 1998 was too short to effect any change in the tax
system.His vice president Gloria Macapagal-Arroyo was swept to power through another EDSA
Revolution. As president,she undertook increased government spending without adjusting tax
collections.This resulted to large deficits from 2002 to 2004. The government had to look for additional
sources of revenue,and in 2005, the Expanded Value Added Tax(E-VAT) was signed into law as Republic
Act 9337.This expanded the VAT base,subjecting to VAT energy products such as coal and petroleum
products and electricity generation,transmission,and distribution.Select professional services were also
taxed.In February 2006, the VAT tax rate was also increased from 10% to 12%.
As President Benigno Aquino III succeeded President Arroyo in 2010,he promised that no new taxes will
be imposed, and additional revenue would have to come from adjusting existing taxes. The
administration ventured into the adjustment of excise tax on liquor and cigarettes or the Sin Tax Reform,
motivations for which was primarily fiscal, public health, and social order related
considerations.Republic Act 10351 was passed,and government revenues from alcohol and tobacco
excise taxes increased.Collections from tobacco and alcohol in 2015 made up 1.1% of the Gross
Domestic Product, and the improvement in tax collection resulted to the Philippines receiving a credit
rating upgrade into investment grade status. The Sin Tax Reform was an exemplar on how tax reform
could impact social services, as it allowed for the increase of the Department of Health budget(triple in
2015)and free health insurance premiums for the poor people enrolled in PhilHealth increased (from
P5.2 million in 2012 to P15.4 million in 2015).
The administration of the new president Rodrigo Duterte promised tax reform,particularly in income
taxes,as it vowed to lower income tax rates shouldered by working Filipinos. The present income tax
scheme of the country is the second highest in Southeast Asia,and the current laws on income taxes
were outdated, as they were drafted two decades ago.The proposed tax reform also seeks to limit VAT
exemptions and increase excise axes on petroleum products and automobiles. It is hoped that reforms
in the ountry’s tax policy will result into the much-desired economic development hat will be felt even
by the lowest classes in society.
93
Along with tax reform came the administrative reforms,such as the restructuring of the Department of
Finance and its attached agency,the Bureau of Internal Revenue(BIR) through Executive Order 127.Tas
collection and tax audits were intensified,computerization was introducen and corruption relatively
reduced,which improved the trust in the BIR general.As a result of the tax reform of the Aquino
administration,both ta and revenue effort rose, increasing from 10.7% in 1985 to 15.4% in 1992.
Greater political stability during the administration of Fidel Rama in 1992 allowed for continued
economic growth.The Ramos administration ventured into its own tax reform program in 1997 through
the Comprehensi Tax Reform Program, which was implemented to (1) make the tax system broad-
based,simple,and with reasonable tax rates2)minimize ta avoidance allowed by existing flaws and
loopholes in the system; encourage payments by increasing tax exemptions levels,lowering th highest
tax rates,and simplifying procedure;and(4)rationalize the grant tax incentives,which was estimated to be
worth P31.7 billion in 1994.
The VAT base was also broadened in 1997 to include services,throu Republic Act 7716.The features of
the improved VAT law were as follows
a. Restored the VAT exemptions for all cooperatives (agricultura electric,credit or multi-
purpose,and others provided that the share capital of each member does not exceed P15,000.
b. Expanded the coverage of the term “simple processes”by includin broiling and roasting,
effectively narrowing the tax base for fooe products.
Importation of meat
House and lot and other residential dwellings valued at million and below,subject to adjustment using
the Consum Price Index(CPI)