BWorld 181, Effects of Supreme Court TRO on RCOA

* This is my column in BusinessWorld last January 18.

“The real bosses, in the capitalist system of market economy, are the consumers… The entrepreneur profits to the extent he has succeeded in serving the consumers better than other people have done.”

— Ludwig von Mises, Bureaucracy

Geographical monopolies in electricity distribution are among the last remaining state-created monopolies in the country via congressional franchises because electricity distribution is considered a “public utility.”

As a result, factories, hotels, malls, or hospitals have no choice but to source their energy requirements from electric cooperatives (EC) or privately run distribution utilities (DU) which were given the franchise to serve these particular locations.

However, Rule 12 of the Electric Power Industry Reform Act (EPIRA) of 2001 (RA 9136) has changed this constitutional and legal guarantee of monopoly through the Retail Competition and Open Access (RCOA) provision.

RCOA breaks the geographical monopoly and allows retail competition in electricity to a contestable market composed of medium to big-ticket electricity consumers. Open access allows any qualified person or entity to use the transmission and/or distribution system and related facilities subject to payment of retail wheeling rates.

With rising power capacity addition yearly and RCOA implementation, average prices in the Wholesale Electricity Spot Market (WESM) have been declining.

In 2010, the cost of electricity in pesos per kWh was at 6.43. In 2011, it was 3.80; in 2012, 4.87; in 2013, 3.85; in 2014, 4.40; in 2015, 3.47; and in 2016, 2.84.

However, in early 2017, the implementation of the RCOA was suspended by a Supreme Court temporary restraining order (TRO). In effect, five resolutions issued by the Energy Regulatory Commission (ERC) from June 2015 to November 2016 were likewise suspended. Besides affecting the voluntary participation of contestable customers (CCs) for 750-999 kW, the suspension also reduced potential competition because many retail electricity suppliers (RES) — especially those whose licenses were expiring — were unable to renew them.

This decline in competition resulted in lower capacity demand by the contestable customers, from 3,456 MW in end-2016 to only 862 MW in November 2017 for the 1MW and higher customers, and from 351 MW end-2016 to only 78 MW in November 2017 for the 750-999 kW customers (see table).

A BusinessWorld report last Jan. 8 entitled “DoE to seek SC guidance on retail competition” said that the department issued a new circular allowing the switching from captive to contestable consumers to allow greater participation from new players. It also allowed the ERC to continue issuing licenses to RES and renew the licenses of RES with expiring licenses.

Here is a summary of the benefits of RCOA to consumers and the Philippine economy in general. Many of these were discussed at the EPDP presentation last September.

1. Contestable customers will have more choices in pricing and power supply contracting — privileges that are not available to small and captive customers.

2. Small customers can aggregate their demand or allow an aggregator to pool their combined demand to become contestable customers.

3. Contestable customers can choose the type or source of power they want. Some simply want cheaper prices, others want stable 24/7 electricity even if costs are higher than those offered by their previous ECs or DUs, whose services may be unreliable. For their part, other consumers who wish to source all of their energy needs from renewables can also do so — as long as they are willing to fork out more money for the privilege.

4. Contestable customers can have full control of their generation costs and are not required to subsidize small and/or off-grid consumers, unlike traditional end-users. They can choose to have flatter load factors by using more baseload, an arrangement that is ideal for companies, especially those that use power 24/7 like manufacturing plants, big hotels, hospitals, and BPO centers.

5. Customers can shift demand to off-peak hours and can “peak shave” to reduce their electricity price. Consumers have big leeway and choices based on their needs and corporate philosophy and branding.

6. There are more than 50 RES to choose from, shown in the table above. Contestable customers can also engage in financial hedging or enter into contracts with any financial provider to hedge its existing contact structure and they need not necessarily be an RES.

7. More investments in power generation can be expected as power companies can contract directly with customers and bypass ECs, a number of which have issues with paying generation companies on time.

The SC TRO has therefore resulted in the following unintended consequences:

1) It disallowed many contestable customers in the 750-999 kW demand category to enjoy RCOA, forcing them to stay with their ECs or DUs and depriving them of the benefits discussed above.

2) Other eligible customers have been discouraged from availing the RCOA due to lingering uncertainties.

3) DUs also face uncertainties whether to get additional generation contracts or not for contestable customers because the latter can leave them anytime once the TRO is lifted.

4) New RES players and existing RES with expiring licenses cannot get new ERC licenses. This means lesser competition among RES, DUs, and ECs. Less competition means lesser choice for customers.

The SC therefore, should resolve this uncertainty soon — either lift the TRO and allow the various ERC resolutions to be implemented again, or strike down those resolutions so that the ERC can issue new resolutions and regulations to implement RCOA. RCOA has to be implemented because it is pro-choice, pro-consumers, and abandons monopolization and unreasonable subsidies.
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See also:

BWorld 178, Top 8 energy news of 2017, January 14, 2018 

BWorld 179, Federalism dream vs centralized government, January 15, 2018 

BWorld 180, Has East Asia liberalized its trade enough? January 19, 2018

BWorld 125, On the retail competition and open access (RCOA) and EPIRA

* This is my article in BusinessWorld on April 19, 2017.

Electricity distribution, unlike generation, is defined as a “public utility” and hence, is granted as a monopoly right via congressional franchise. There are more than 120 distribution utilities (DUs) such as Meralco and electric cooperatives.

To dilute this monopoly, the Electric Power Industry Reform Act (EPIRA) which was passed in 2001 came with Section 31, Retail Competition and Open Access (RCOA) that “shall be implemented not later than three (3) years upon the effectivity of this Act,” and Section 29, Supply Sector, “The supply of electricity to the contestable market ...” These are useful, anti-monopoly provisions, thanks to EPIRA.

The RCOA was finally implemented 12 years after, on June 26, 2013. The Department of Energy (DoE) and the Energy Regulatory Commission (ERC) issued orders to implement this beautiful provision.

But somewhere along the way, what should be a competitive scheme has become a “mandatory” order.

Some electricity consumers are unhappy because their choice to stay with their DUs -- especially if these provide them good service and prices -- has been done away with. This is why they went to the Supreme Court (SC) and asked for a Temporary Restraining Order (TRO) against the RCOA.

Below is a summary of these orders (one from DoE, four from ERC, and one from the SC).

The SC TRO has mixed signals. It is good because (a) it stopped the “mandatory migration” to RES by contestable customers (CCs) and thus, they have the option to stay with their DUs or not, and (b) local RES will be allowed again. But it can also be bad because (a) it stopped the voluntary participation of CCs for 750kW (lowered threshold), and (b) some ERC Resolutions suspending earlier prohibitions to Retail Electricity Suppliers (RES) are also removed.

Government prohibitions should be kept to the minimum as much as possible.

These prohibitions would give people -- especially those with very low technical and financial capacities -- the right to become RES which might invite abuse of CCs.

Such prohibitions should not include more RES players, the right of CCs to stay with their DUs or not, and voluntary participation of customers at 750kW.

EPIRA has provided for more customer choices, strengthened consumer empowerment, and demonopolization of electricity generation and distribution. Let this spirit stay in the succeeding orders of the DoE and the ERC.

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See also: 

BWorld 122, Six more myths in the mining debate, April 13, 2017 

BWorld 123, Drug-related murders and criminal justice in Asia, April 23, 2017 

BWorld 124, On Grab, Uber, traffic and LTFRB, May 05, 2017

Mining 13: Timeline of Policies

This afternoon, there will be an oral argument and debates at the Supreme Court in Baguio City. Two petitions by Risa Hontiveros, et al challenge the constitutionality (for the second time) of RA 7942 or the Philippine Mining Act of 1995, particularly Sec. 80 and 81 of the law.

In the SC website, it says,

Petitioners argue that: (1) section 811 of the Mining Act of 1995 is unconstitutional because: (1) it violated the rule on delegated legislation; (2) the Secretary of the DENR (public respondent) acted with grave abuse of discretion resulting to lack or excess of jurisdiction in the issuance of DAO 07-12; and (3) both section 81 of the Mining Act and DAO 07-12 are unconstitutional because they allow inequitable sharing of wealth contrary to Article XII, Section 1, par. 1 and Section 2, par. 1 and 4 of the 1987 Constitution.

Will watch the results of the debate later today and tomorrow.

Meanwhile, below is a short timeline of various policies governing the mining industry in the country. I saw a rappler report on timeline mining. It was highly incomplete though as there are many other DENR Administrative Orders (DAO) and Department Memorandum Circulars (DMCs) affecting the industry. I skipped several DAOs and DMCs in producing this list.

Presidential Decree 1899, January 23, 1984
Defining small-scale mining as "artisanal", thus disallowing sophisticated equipment, involving minimal investments in infrastructure and processing plants, and relies on manual labour.

Republic Act 7076, June 27, 1991
People’s Small Scale Mining Act of 1991, "Minahang Bayan." Forms the Provincial/City Mining Regulatory Board that supervises small scale mining operations alongside the chiefs of the Environment Department and Mining Bureau.

Department Administrative Order (DAO) 1991-66, December 27, 1991 
Declaring certain parcels of Agusan-Davao-Surigao Forest Reserve as non-forest land open for small-scale mining. Parts of Diwalwal gold-rush area in Davao region was open to small-scale mining.

DAO 1992-34, July 14, 1992

Implementing Rules and Regulations (IRR) of RA 7076. 

RA 7942, “Philippine Mining Act of 1995”,  March 3, 1995 
Liberalizes foreign investments in the sector, involves the Local Government and Indigenous Cultural Communities in minerals exploration. Followed by a Financial and Technical Assistance Agreement (FTAA) with foreign-owned Western Mining Corporation Philippines (Tampakan mine).

DAO 1995-23, August 15, 1995

Implementing Rules and Regulations (IRR) of RA 7942. 

Jun. 19, 1995 
La Bugal-B'laan Tribal Association questioned the Constitutionality of RA 7942 and its IRR, particularly the FTAA, which allows foreign ownership, before the Supreme Court.

DAO 96-40,

Revised IRR of RA 7942.

Proclamation No. 297, November 25, 2002 
Establishing the 8,100-hectare Diwalwal Mineral Reservation.

Joint MC DENR-DTI 2003-02, September 10, 2003

Establishment of a Mining Investment Assistance Center.

SC ruling, RA 7942 as unconstitutional, January 2004
The Supreme Court en banc said the Mining Act of 1995 is unconstitutional since it allows foreigners to engage in mining through FTAAs, which is contradictory to the 1987 Philippine Constitution. 

SC reverses, declares RA 7942 as constitutional, December 2004
The Supreme Court reversed previous decision on the unconstitutionality of the Mining Act. Associate Justice Artemio Panganiban pens a resoution that says "full control is not anathematic to day-to-day management, provided that the State retains the power to direct overall strategy". This gives the government a go-signal to issue FTAAs.

DAO 2007-15, July 19, 2007

Amendments to DAO 96-40.

DMO 2009-01, January 30, 2009

Delegating the authority to issue Mineral Ore Exports Permit to the Provincial Governors concerned.

DMO 2010-08, June 29, 2010

Consolidated DAO re IRR of RA 7942.

DMO 2011-01, January 18, 2011

Suspension of acceptance of all mining applications.

EO 79, July 06, 2012

Institutionalizing and implementing reforms in the Philippine mining sector.

Imposes a moratorium on new mining contracts, creates the Mining Industry Coordinating Council (MICC). identify no-go areas for mining. (7 pages)

DAO 2012-07, September 10, 2012

Implementing Rules and Regulations (IRR) to EO 79 (16 pages)

DMO 2013-01, February 21, 2013

Increasing the minimum capital requirements for mining applicants – EP, MA, FTAA.

Authorized capital from P10 million to P100 million.

Paid up capital from P2.5 million to P6.25 million.

DAO 2013-10,  February 21, 2013

Increasing fees for mining applications.

Exploration Permit (EP) from P60/hectare but not less than P50,000 per application, to P300/hectare but not less than P200,000 per application.

Mineral Agreement (MA) from P60/hectare but not less than P50,000 per application, to P300/hectare but not less than P300,000 per application.

FTAA from P60/hectare but not less than P190,000 per application, to P300/hectare but not less than P500,000 per application.

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See also
Mining 9: Supreme Court Hearing on RA 7942, March 27, 2013
Mining 10: Urban Tailings vs. Mining Tailings, March 31, 2013
Mining 11: Big Projects in the US, UK, Canada and Australia, April 04, 2013 
Mining 12: Political Risks vs. Natural Risks, April 09, 2013

Mining 9: Supreme Court Hearing on RA 7942

This morning, I saw this poster in the facebook wall of one or two friends, about the Mining Act of 1995 (RA 7942). I think this was made by the Legal Rights and Natural Resources Center, Inc. (LRNRCI).

Three things caught my attention. One, oral debates at the Supreme Court. Some groups could be contesting the constitutionality of that law until now. But it’s an 18 years old law now, why would its Constitutionality be questioned and not earlier?

This law is a product of Congress, not the SC. So people can initiate and support new legislation that will scrap or significantly amend that law. Why can't they go through this legislative process? 

Two, Tax Regimes. The focus of the oral arguments is on taxation? But a new bill on mining taxation will be introduced when the new Congress resumes in late July this year, so why would the Supreme Court hear arguments on things that are Constitutionally a function of the Legislature?  I also read that the BIR made recent Revenue Regulations that seem to reverse the Mining Act on taxation. The Act says taxation should start "after a cost recovery period" or similar term, while the BIR wants taxation to start "during cost recovery period." The BIR is the mini-legislator and implementer at the same time, weird. 

Three, the photo. Am curious which mining project it came from, and if it is the actual mining site or a mine tailings pond? If it is the latter, then that company is doing responsible mining, preventing mine tailings from going into the sea. Mine tailings ultimately dry up, wild grasses can grow on them later. A company may also cover a dried up tailings pond with ordinary soil, then plant trees on them. After a few years, there is zero trace that it was once a mine tailing pond.

Then there were two news reports yesterday about this event in Baguio next month, below. Portion of the news report from PhilStar says that the SC will hear “alleged adverse effects of mining to the environment, health of the community and human dignity.” 

I didn't know that the SC is also into oversight function, I thought it is the job of the Executive branch (DENR, MGB) and Legislative branch that creates or amends existing laws.

The Consti provision, “All lands of public domain, waters, minerals, coal, petroleum and other mineral oils,... are owned by the State.” (Art XII, Sec. 2, PH Constitution)  I think is misunderstood. When a mining company removes top or mid-soil and rocks, say 10 meters below the original level, the land is still there. One can dig 20 kilometers of the planet's crust, deep into the mantle (but they will burn due to intense heat from the planet's core) and the "land area" is still there, owned by the state.

Many anti-mining groups and individuals argue that mineral deposits and products are non-renewable and must be protected by the government from commercial interests. This position is questionable actually.

In a mining forum at DLSU that I attended, a mining engineer from UP, Rodalee Ofiaza, said that geologic processes -- movement of magma (molten rock, still underground), various hot gases from the planet's core to the mantle, onto the crust (the soil where we stand) can turn ordinary soil and rocks into mineral deposits via igneous process or sedimentary process. With the help of volcanoes and earthquakes, which allow the trapped magma and gases at the outer core to move upwards.

The implication here is that since those geologic processes are going on endlessly, and rain water seepage deep into the ground, the heated water turn into gases (some become "hot spring") that contributes to the formation of mineral ores. In short, mineral products are renewable through geologic processes and cycles. Like rain is renewable through hydrologic cycle.

No mining, no modern life. No cell phone, no tv, no computer, no internet, no electricity, no cars, no bicycles, no buildings, no nails and hammer. And yet mining is the most over-taxed sector in the country as if it is a useless activity, as useless as over-politicking.

Below are two news reports yesterday from Business Mirror and Philippine Star. Generally similar content and titles,

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(1) from Business Mirror

SC to hear arguments on constitutionality of mining law

Published on Sunday, 24 March 2013 21:01

Written by Rene Acosta / Reporter

THE constitutionality of Republic Act (RA) 7942, or the Philippine Mining Act of 1995, will be scrutinized by the Supreme Court (SC), which is set to hear oral arguments for and against the law.

The High Court has ordered both the government and petitioners to argue their case on April 16, when it will tackle a temporary restraining order sought by two lawmakers against implementation of the controversial law.

The lawmakers have been joined in their petitions by several residents of Davao Oriental province in southern Mindanao supposedly affected by mining activities of Hallmark Mining Corp. and Austral-Asia Link Mining Corp. They and the residents also named as respondent the Department of Environment and Natural Resources (DENR).

In January this year, the petitioners asked the SC to stop the DENR from acting on any application for Mineral Production Sharing Agreements (MPSA) that cover 17,215.4474 hectares of land in the municipalities of Mati, San Isidro and Governor Generoso in Davao Oriental….

(2) from Philippine Star 

SC tackles constitutionality of Mining Act

By Edu Punay | Updated March 25, 2013 - 12:00am

MANILA, Philippines - The Supreme Court (SC) will take a second look into constitutional issues regarding Republic Act 7942 or the Philippine Mining Act of 1995 as it tackles petitions of lawmakers against the widely criticized law during oral arguments in court’s summer session on April 16 in Baguio City.

In the guidelines released last Friday, the high court listed four common issues in the petitions filed by Quezon 4th district Rep. Lorenzo Tañada III, Bayan Muna party-list Rep. Teddy Casiño and former Akbayan party-list Rep. Risa Hontiveros.

The debate will tackle the legal standing of the petitioners and whether or not the legal questions they raised can be subject to judicial review.

The SC also directed parties to argue on whether or not it could still rule on the case given that it had already decided on a similar case of La Bugal-B’laan Tribal Association vs. Ramos administration in December 2004…

Lastly, the high court wanted the petitioners and respondents to discuss the “alleged adverse effects of mining to the environment, health of the community and human dignity.”

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See also:
Mining 5: Benefits of Mining Even Without Taxes, December 09, 2012
Mining 6: Large Investments vs. Large Bureaucracies, February 19, 2013 
Mining 7: Mining Taxation and Government, March 08, 2013
Mining 8: Rio Tuba Mining in South Palawan, March 17, 2013

Rule of Law 16: On the New SC Chief Justice Ma. Lourdes Sereno

From so many lawyers in the Philippines, among them whom I highly respect is Atty. Theodore "Ted" Te. Not only that he was a friend way back in our undergrad days in UP Diliman in the mid-80s, I like the way he speaks frankly on many issues.

After the announcement of the new Supreme Court (SC) Chief Justice, UP Law Professor Ma. Lourdes Sereno, Ted posted these in his facebook wall. I like his opinions, so I am reposting them here.
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"For such a time as this": It is a landmark appointment in two ways--Chief Justice Sereno is the first female to sit as such and, unless sooner removed or resigned, she will also serve for the equivalent of the terms of three Presidents. It is also a nod to the past, specifically to the "deep selection" that the first President Aquino favored, with the Chief Justice bypassing all of her colleagues who were nominated for the same Office.

Chief Justice Sereno was my professor and colleague at the faculty of the University of the Philippines. A deeply prayerful person wont to quote scripture together with legal provisions, her biggest challenge right now is to transform--(a) herself from the Court's dissenter to the Court's leader and consensus builder by showing that she can do more than write courageous and stinging dissents, and (b) her image as the current President's favored one (being the first to be appointed as Associate and the first to be appointed as Chief Justice under his watch) by displaying, if necessary and where appropriate, an unexpected ingratitude to the appointing power. In doing so, she will thereby transform the Court that she now leads.

As I did when I learned of her appointment as Associate Justice (which was the last time I texted her), I offer her now my congratulations for the appointment and my prayers for courage, wisdom,strength and protection in the years ahead. Perhaps the call for her, as Chief Justice, is to not remain silent and hold her peace lest relief and deliverance rise from another place but to appreciate that she has been gifted with high office "for such a time as this." (Esther 4:14)

Rule of Law 14: Appointing the New CJ of the Supreme Court

One irony of the supposed independence of the Judiciary from the Executive branch in the Philippine government, is that the Chief Justice (CJ) and all other Justices of the Supreme Court, are appointed by the President of the country. Although there is a Judicial and Bar Council (JBC) that shortlists and narrows down the list of nominees for the posts, say from 20+ nominees to only three, the final judgment of who should comprise the highest court of the land still rests in the hands of the President.

It is a legal and technical limitation indeed. But if not the President, who will appoint them, the non-elected members of the JBC? Should Justices of the SC run for elections, say among lawyers, and winners will become Justices of the SC, and they will elect among themselves who will be the CJ? All these are not plausible either. So we have to live with the current set up. Not a perfect one but is working nonetheless.

There are more than 20 nominees now, all of whom have accepted their nomination and many of them are "outsiders", meaning currently not Justices, for the new CJ of the SC. They include a number of officials in the current administration, academics, corporate practitioners.

I am posting two good ideas from two good lawyer-friends. One from current UP Law Dean Marvic Leonen, and one from former UP Law Professor, former DOE Secretary, Raphael "Popo" Lotilla. Marvic and I belonged to the same undergrad organization in UPSE, the UP Economics Towards Consciousness (ETC) although he's one year senior than me. Popo was a former dormmate from Narra Residence Hall in UP.

I like Marvic's questions, they are direct to the point. And I like Popo's arguments why he declined his nomination to the post. I believe that all "outsiders" among the current nominees should back out, and consider being nominated as one of the Justices to fill up the vacancy of someone who will be appointed as the new CJ.  Photos, Marvic on the top, Popo below.

Here are the two papers.

10 Questions for Applicants to the position of Chief Justice, Supreme Court of the Republic of the Philippines


by Marvic Leonen, Tuesday, June 5, 2012

Questions to test their command of the law:

(1) What do you think are the various credible ways to "read" the constitution? What is your preferred interpretative modality?

(2) Do you think that the Court improperly flip flopped in the PAL Labor Case? in the League of Cities Case? Would you think that this would impact on final and executory cases pending in lower courts or cited as precedents in the future? What measures, if any, would you seek to introduce to prevent these incidents to happen again?

(3) Do you agree with the current state of jurisprudence of the Court relating to those who criticize it? For instance, do you agree that academics can be held liable for criticisms of decisions rendered by the Supreme Court? Also, do you agree with the current standard that journalists must meet in order to escape punishment from the Court?

(4) Do you agree with the current state of jurisprudence relating to media and the courtroom? Why or why not?

(5) Do you believe that constitutional rights to privacy are unduly infringed if foreign currency deposits of public officials are made public? Why or why not?

(6) What is your position on affirmative action and minority rights?

Questions to test the managerial knowledge of the candidate.

(7) What interventions, if any, would you introduce to speed up the delivery of justice in all our courts? Why do you think these interventions have not been introduced or completed in the past?

(8) Recent studies in law and economics point to the importance of administrative fees both to filter cases and to enable the litigants to internalize the costs of litigation. Do you agree in changing the basis of docket fees so that it becomes a percentage of the networth of all the plaintiffs rather than on the nature of the litigation? Why or why not?

(9) Do you agree with the proposition that it would be better if the President named his choice for a judicial position and this be vetted by the Commission on Appointments rather than by the Judicial and Bar Council? Why or why not?

(10) Can you give us a briefing of the various reforms put into place by various Chief Justices in the past to increase access to justice? What additional interventions, if any, would you introduce?
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My Dear Friends,

I have considered thoroughly the nomination that you have submitted to the Judicial and Bar Council, and I can only express to you my sincere thanks, but regretfully have to decline.

In the past, I took the position that in a highly politicized context as in the Philippines, appointment to the office of the Chief Justice based on seniority is a tradition that minimizes the jockeying for appointment from within and outside of the Court. I still have to be convinced of the wisdom of departing from that view.

Without any legal compulsion behind it, this tradition was, in instances few and far between, set aside. But, time and again, its restoration has been welcomed with relief, like a lost valued symbol of character regained anew. Today, we have an opportunity to restore the tradition—or completely to overturn it. It reminds me of a story told, apocryphal perhaps, that the much venerated Justice Jose B.L. Reyes—who was older in age but less senior in tenure in the Court than the respected Roberto Concepcion—was considered for appointment as CJ to allow him to occupy the Court’s highest position. J.B.L., it is said, would have none of it.

The tradition of seniority has a way of muting political ambitions and insulates to some degree the office of Chief Justice from the patronato system. Over the long term, particularly under future presidencies whose virtues we are unable to anticipate at this point, adherence to the principle of seniority may still be our best option. Restoration of the tradition, which is entirely of Philippine innovation, would then shift the national focus to the quality of every future appointment to the Court, and away from the position solely of the Chief Justice. Would not this be in better keeping with the collegial character of the Republic’s Supreme Court?

I suggest that only for overwhelming reasons, such as the inability of the incumbent members of the Court to redeem themselves and the institution, should we consider appointing from outside of the Court. Whether these weighty considerations exist, the appointing power can be a better judge from the unobstructed view of the leader’s lair. But my own individual assessment is colored with undisguised optimism: that the members of the Court, individually and as a collective, have distilled from recent experience lessons of primordial import for rebuilding and strengthening national institutions including the Court itself.

Wishing you all the best with a reiteration of my profound thanks,

Sincerely yours,

Popo
Raphael P.M. Lotilla
June 17, 2012
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See also:
Rule of Law 8: Purpose and Supremacy of the Law, June 15, 2010
Rule of Law 9: Laws, Prohibitions and Corruption, June 30, 2010
Rule of Law 10: On Wang-wang and Government Laws, July 04, 2010
Rule of Law 11: RoL Index, October 15, 2010
Rule of Law 12: Gloria Arroyo, Travel Abroad and the SC, November 16, 2011
Rule of Law 13: Freedom Barometer 2011, March 23, 2012

Corona Trial 7: Public Distrust and Public Choice Theory

It's over for the Chief Justice of the Supreme Court of the Philippines, Renato Corona. The impeachment move by the House of Representatives last December has been affirmed by the Senate yesterday in a 20-3 vote in favor of conviction.

In a number of facebook discourses among my friends, I advanced the position that the term "betrayal of public trust" by the CJ may not be appropriate and not correct after all. Some people, me included, never trusted the CJ (and many other high government officials) in the first place. So there was no betrayal of my trust, of our trust. Rather, there was only confirmation of my distrust, of public distrust, of the CJ.

While I have been following recently the impeachment trial, I have no hope or illusion that a conviction or acquittal of the CJ will result in the shrinking of government powers and expand individual freedom. What I only wished is that the Senate judgment will result in more transparency in government and hence, in less abuses, robbery and wastes in government. Of course between choosing conviction or acquittal, I wished that the CJ would be convicted, and I was not disappointed. I have observed from various sources how the shady character of the CJ would result in more rule of men, not more rule of law, culture in this country.

On the thesis that no major changes in government policy towards shrinking its powers over the individuals and ordinary citizens, I like this (second to the last) concluding paragraph on Public Choice theory by William F. Shughart II:

One key conclusion of public choice is that changing the identities of the people who hold public office will not produce major changes in policy outcomes. Electing better people will not, by itself, lead to much better government. Adopting the assumption that all individuals, be they voters, politicians, or bureaucrats, are motivated more by self-interest than by public interest evokes a Madisonian perspective on the problems of democratic governance. Like that founding father of the American constitutional republic, public choice recognizes that men are not angels and focuses on the importance of the institutional rules under which people pursue their own objectives. “In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself” (Federalist, no. 51).

(h/t  http://prudentinvestornewsletters.blogspot.com/)

Government and governors controlling the governed, administrators controlling the administered, is a big magnet for the shrewd and dictators among the people, to join government.

I hope that the next CJ of the highest court will have a deep appreciation of the dangers of BIG government and big powers that are currently on its hands, and more powers being invented and concocted to further regulate, restrict and prohibit more  actions by individuals unless there are explicit permits and registrations from the government
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See also:
Corona Trial 1: Impeaching the SC Chief Justice, December 13, 2011
Corona Trial 2: Impeachment for Beginners, December 14, 2011
Weekend Fun 29: Corona Impeachment Cartoons, March 02, 2012 
Corona Trial 6: Miscellaneous Opinions on the Trial, May 28, 2012

Corona Trial 6: Miscellaneous Opinions on the Trial

Later today or tomorrow, the Senators will vote whether to convict or acquit the Chief Justice of the Supreme Court. I am posting some comments below from some of my friends (all from UP), posted in their facebook walls. Entertaining and educational at the same time.  Here they go.

(1) From my engineer-economist friend, Ms. C.

This is not meant to be my definitive comment on the Impeachment Case, cause I think we, as a nation should abide with what the Senate decides. Follow the rule of law, and the consitution. If you don't agree with the verdict, don't vote for the senators who voted against your interest.

But this is an illustration of how NOT to be a text spammer, and how SMS is not the best means to spread propaganda, as the result may be the opposite of what you intended.

An Unknown number (UNK) sends me the following SMS:

UNK: Walang humpay na pagyurak sa dangal at pagwasak sa pagkatao ni CJ Corona ay gawain ng isang taong may sakit sa UTAK. Diktador PNOY dapat ang kalusin!! Pls pass.

ME: Sino ito? I happen to think that Corona should be impeached! Kaya tumigil kayo sa spam texting.

UNK (at dito uminit ang ulo ko): Wag kna kase magtext.

ME (simula ito ng mahabang diatribe kasi para akong si Hulk kapag nagalit, but instead of turning green, eh writing skills ko ang nati-trigger): Hoy! wala kang karapatang magsabi niyan, ikaw kaya nauna. Tapos kung may text back sa iyo na kumokontra, galit ka?! The CJ should be above reproach at hindi ninyo dapat defense na lahat ng nasa public service defective ang SALN. Cleaning the government needs to start somewhere.

ME (hindi pa din nasiyahan): Ang lakas ng loob ninyong mag text campaign tapos if the person does not comply with your "pls pass" at bagkus, kumokontra sa inyo, galit kayo? Punyeta kayong lahat. Eh kung ipa-trace ko kung kaninong number ito? Sino ba ang pumopondo sa inyo? Kung madami silang ninakaw na pera isoli na lang nila kamo!!!

Ang point ko lang, is if you want to get PR points, you should have a ready reply, something diplomatic along the lines of "I'm sorry that you don't have the same opinion, but thanks for your feedback" would have been much better.

Sasabihin nila Diktador si PNOY pero bawal mag-express ng dissenting opinion? Pag hindi ka agree sa kanila "Wag kna kase magtext."?! Sana makaabot ito sa PR machinery ng defense.

(2) From Atty. Ted.

FROM WHERE I SIT: The prosecution has its task cut out for them; in its closing argument, it should convince enough of the undecided Senators to vote for conviction and not simply abstain because an abstention is equivalent to a vote to acquit if one or enough abstentions result in a failure to get 16 votes. All the respondent needs is 8 votes and he retains the office.

The path of least resistance for a Senator, who is unconvinced of guilt but may not want to antagonize the administration, is to abstain; so too for a Senator, who is unconvinced of innocence but may not want to antagonize the Chief Justice or the Vice President, who is perceived to be sympathetic to the Chief Justice.

The number, for historical purposes, is 16 and 8. If the Chief Justice gets a total of 8 votes, whether to acquit or to abstain, he wins. If he gets less than 8 votes to acquit but gets enough abstentions to prevent 16 votes for conviction, he also wins.

(3) From a famous professional PR manager Malou:

For those wanting to follow the numbers. Here they are:

1. Re-elect
Legarda, Escudero, Honasan, Pimentel, Trillanes, A. Cayetano

2. End of term
Arroyo, Angara, Villar, Lacson, Pangilinan, Santiago

3. LP
Drilon, Guingona, Recto, Osmena, Pangilinan

4. Leadership positions
JPE, Estrada, Sotto

5. Non-lawyers -12
Estrada, Sotto, Legarda, Honasan, Trillanes, Revilla, Lapid, Recto, Osmena, Villar, Lacson, Marcos

6. Lawyers -11
JPE, Santiago, Arroyo, Angara, Drilon, Pangilinan, Guingona, Pimentel, A Cayetano, P. Cayetano, Pimentel....

Manner of voting on Tuesday, May 29, is alphabetical in the ff order: Angara, Arroyo, AP Cayetano, P. Cayetano, Defensor-Santiago, Drilon, Estrada, Escudero, Guingona III, Honasan II, Lacson, Lapid, Legarda, Marcos Jr., Osmeña III, Pangilinan, Pimentel III, Recto, Revilla Jr., Sotto III, Antonio Trillanes IV and Villar. JPE, presiding officer votes last.

Why is this impt: the 15th vote to convict once achieved will tilt the scale. So do your analysis from this order....

After 41 days, my sense is there are 3 hard votes for acquittal: Santiago, Arroyo and Marcos. There are 5 hard votes for conviction, and they are all LP: Drilon, Guingona, Recto, Pangilinan and Osmena. There is a swing bloc composed of the leadership positions: JPE, Estrada, Sotto, Honasan, I see Revilla voting in this bloc bec of JPE. Then you have to make 2 columns: leaning towards A and leaning towards C. Watch their body language today during the closing and the kind of questions they will ask.

(4) From Atty. Marvic. (posted yesterday)

Not evidence per se but triggers a presumption, i.e. if a public officer's income is not commensurate with his emoluments, he has the burden to explain...

Public officials: Avoid scrutiny anti graft law, "comingle" peso accounts w/ relatives, convert most to dollar accounts: sound legal advice?

(5) From Atty. Harry (posted last Friday)

With Corona's admission of $2.4Million undeclared in his SALN, he has has assured himself of a conviction. Who will be next CJ? Hope P Noy considers a genuine intellectual this time around. Probaly from the academe?

(6) From Atty. Jojo (posted last Wednesday)

After the senate adjourned and as Corona was wheeled out slowly out of the session hall, notice that not one senator even attempted to touch the Chief Justice of the country with a ten foot pole, and instead was avoided like a leper. At that point, Renato C. Corona was no longer the Chief Justice insofar as the senators were concerned. The midnight appointee was never Chief Justice insofar as I am concerned.
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Am not in the mood to make any commentary now on this issue. Will do it tomorrow. I have posted my earlier comments on this subject though:

Corona Trial 3: Impeachment, the Senate and the Supreme Court, May 20, 2012
Corona Trial 4: Walkout at the Senate, May 22, 2012
Corona Trial 5: Walk out from the Senate, Walk in to the Hospital, May 23, 2012
Fat-Free Econ 10: Impeachment, the Senate and Rule of Law, May 27, 2012

Fat-Free Econ 10: Impeachment, the Senate and Rule of Law

This is my article last Thursday in TV5's news portal,
http://www.interaksyon.com/article/32759/fat-free-economics-impeachment-the-senate-and-rule-of-law
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Justice is a higher order than national defense and the economy. In the Third Republic of the Philippines, the raison d'etre of the state is to render "no injustice to anyone.”

This is one of the key arguments made by a fellow UP School of Economics alumni, Dr. Armando “Mandy” Armas Jr., in his new book Impeachment Quagmire: Is the JPE Senate Court Legitimate?

I think Mandy is rewording the concept of the rule of law here, and I agree with his definition of the rationale for government existence: to cause no injustice to anyone, promulgate the rule of law, and by extension, protect private property rights and the citizen’s civil rights, such as freedom of expression, freedom from aggression.

Mandy further wrote: “As the palladium of democracy, impeachment trials are allegedly characterized by the tyranny of judges, Roman orgy of publicity, and the opium of religion. Are senators qualified to be judges in a court of law?”

Orgy of publicity, true. Opium of religion, not sure of this. And yes, senators are qualified to be judges in a court of law. The Philippine Constitution has given them such qualification.

An impeachment trial is mainly a political, not judicial, exercise. Once impeached by the House and convicted by the Senate, an official does not go to prison. He is simply removed from office. So the impeachment trial is only a vote whether the official can stay or not in their job; in the present case, as Chief Justice of the Supreme Court.

To bring an impeached, then convicted, official to prison, one has to bring the case to a regular court and go through the regular judicial processes like presenting various evidence to prove that the impeached official has violated certain criminal laws.

Here the judge is not an elected official who gets their mandate through political popularity, but someone who has been appointed by virtue of their knowledge of the laws and the Constitution, and their supposed impartiality from political pressures and biases.

So have the judge-senators acted with tyranny? No, or not yet, as the trial is ongoing.

This impeachment trial has wide economic consequences. Many business cases - or criminal cases with business implications - are decided with finality at the Supreme Court. If the people have trust in the objectiveness and impartiality of the High Tribunal, especially of the Chief Justice, then they will obey its decision with little or zero objection. And society and businesses can go on with little instability and uncertainty.

But if the people have little or no trust in the Supreme Court, then actors and players endlessly question its decisions, eroding society and the economy.

Economic transactions are anchored on trust. A person buys a vehicle from a motor shop at a particular price on the assumption that what are stated as the vehicle’s capacity and properties are true. If after the sale, the vehicle easily breaks down, trust is broken and the client will directly complain to the seller. If the response is unfavorable, the client can go to court to get proper compensation.

If the courts - from the lower to the higher courts - are perceived to be corrupt and impartial, some people may resort to non-judicial processes to get even, like property sabotage of the motor shop, or even inflict physical harm on the shop owner and its officers. And this will create another round of economic uncertainties from the micro to the macro levels.

While the impeachment trial is sometimes billed as a trial for good governance, there is reason to consider that this is also a big fight between the leaders of two branches of a “big” government, the President and the Chief Justice, respectively.

There is too much political and economic power in the hands of the government and its three branches - the power to impose and implement various regulations, prohibitions and taxation in the lives of the people. It is that big power, and the discretionary power whether to fully apply or exempt certain laws on certain people, that attract many of the shrewdest, the most clever among us to be in government, in any or all of the three branches.

The Senate as a political and not judicial institution - and the senators as elected not appointed officials - have a big stake in promulgating the rule of law and ensuring economic stability in the country.

A society and government that promulgates the rule of law will deter the shrewd and opportunistic from joining the government. Or deter the good guys there from becoming bad guys later. This is because of a greater certainty of discovery of a crime and punishment of the violators.

If existing institutions are doing their job well, then there is no need to keep expanding the government. We will ultimately have a lean, minimal and trustworthy government. A government that expands, not restricts, individual freedom; and a government that gives more personal responsibility to people in running their lives.
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See also:
Corona Trial 1: Impeaching the SC Chief Justice, December 13, 2011
Corona Trial 2: Impeachment for Beginners, December 14, 2011
Weekend Fun 29: Corona Impeachment Cartoons, March 02, 2012 
Corona Trial 3: Impeachment, the Senate and the Supreme Court, May 20, 2012
Corona Trial 4: Walkout at the Senate, May 22, 2012
Corona Trial 5: Walk out from the Senate, Walk in to the Hospital, May 23, 2012

Corona Trial 3: Impeachment, the Senate and the Supreme Court

I personally believe that Chief Justice (CJ) Corona is corrupt, he should have resigned early on. Or he should have not accepted in the first place, the offer of being a CJ during the last few weeks of the Gloria government. But government being an institution of coercion, is full of hypocrisy, both the accused and the accusers have dirt in their hands. Nonetheless, the impeachment proceedings are going along the rule of law, the law as stipulated in the 1987 constitution.

If he is not corrupt, he should have volunteered to face the impeachment court even on Day 1 of the Senate trial. If someone will accuse me of being a theft or corrupt or what have you, I will challenge that person to a public debate or trial not a month or a week from now, but right there and then. People who are evasive and most likely guilty of corruption, would buy time, employ all forms of legal technicalities to delay or even duck personal appearance, showing cowardice in a highly charged impeachment trial. He was forced to announce an appearance only after the damaging testimony of the Ombudsman.

The discovery of his huge dollar accounts that were not reflected in his Statement of Assets, Liabilities and Networth (SALN) is now a big proof of his dishonesty. Private citizens have the right to privacy like keeping huge dollar accounts, true. But public officials are not private citizens. No one put a gun on their head to join government, they entered the service on their own, voluntarily. Thus, the law on transparency of public officials should apply to them, ALL of them, from local to national government officials and personnel.

If one is already rich and has joined the government, then one should declare those wealth, say a billion pesos networth. After his term and the networth is slightly bigger than the original amount, no one can accuse that official of enriching himself while in government, because the public is aware that he was already rich before joining the government.

Thus, even if Corona has only US$ 1,000 in his foreign currency accounts, he still should have declared it in his SALN. By hiding it, is additional proof that he indeed cheated on his SALN. A cheater on small things can be a cheater on big things, and he is the CJ of the Supreme Court, the last bastion in society to promulgate the rule of law.

Private intrusion of public officials' lives is limited to what are provided in existing laws. Like the law on mandatory declaration of SALN each year. If someone will demand that the SALN of official X is questionable for whatever reason or purpose, then such SALN should be readily available, no presumption of guilt yet.

If one is rich and does not want his/her wealth to become a public commodity someday, then he/she should not join the government. If there is low supply of qualified people to head certain bureaucracies for fear of such public scrutiny, then well and good, we can start abolishing some agencies and we also start reducing if not abolishing certain taxes that finance those agencies.

Meanwhile, I like this article by Peter Wallace....

http://manilastandardtoday.com/2012/05/04/its-all-about-morality/

It’s all about morality

Posted May 4th, 2012 by Peter Wallace & filed under Opinion.

I was at the Supreme Court before Holy Week and was horrified to see huge “campaign” banners proclaiming SC personnel’s support for Corona. It looked like campaign headquarters, not a nation’s Supreme Court. These are people who are supposed to take no sides, to be completely dispassionate and make no judgments outside what the court decides. It may be that it’s not only Corona who doesn’t have the moral character for the position, but the whole court. Is it why there are close to 8,000 pending cases in that court? Is it why cases in the courts under its control can linger longer than the sentence that would be imposed IF people incarcerated in jails awaiting trial are found guilty? Is it why the alleged (I must say that according to the lawyers) murderers of 57 people can be in a court for two years and four months with no progress on the trial at all? Yet a former president, a friend of the court, can get an inconsequential, in comparison, a temporary restraining order issued in hours.

It seems Corona was right on one thing, this is not an attack against him, as a person, but the Judiciary as a whole. Given this disgraceful exhibition on the front of the Supreme Court of the Republic of the Philippines, the court as a whole should indeed be under investigation. This is partisan politics of the worst kind. If Corona is found guilty simple logic says they should go too. Or don’t court employers do Logic 101, let alone courses on morality, decency and polite social behavior?

When a man can accept an appointment with glaringly obvious political motives from a leader who will no longer be there, and nine of 15 Supreme Court justices can agree it’s OK, then the moral fabric of Philippine society is indeed in tatters.

It’s time for a complete shakeup of the Philippine court system in its entirety, not just removal of one man. Let’s hope this is the catalyst for that.

The Dalai Lama said “there is no religion higher than truth”. Corona and his lawyers might want to reflect on this. They should be wanting to expose the truth, not hide through obfuscation as has been their want to date. The Dalai Lama added, “What really is important to me is your behavior in front of your peers, family, work, community, and in front of the world”. And Corona might want to add “in front of his god”. Does he have the clear conscience God will expect?

The acceptance of a midnight appointment was behavior unbecoming of a Chief Justice of a nation. For that reason alone, he is unsuitable. An honorable man would have politely declined and left it to the incoming leader to make the choice. He failed to meet the high moral standards demanded of a Chief Justice. If he were an honorable man, as he claims, he would save the nation from all this divisiveness and dissension, and resign. That he doesn’t is another reason he’s unsuitable.

The nine 9 justices who declared the midnight appointment as constitutional should also be impeached. Better yet, they should resign in shame. They have brought shame to this society dismissing morality so cavalierly, so loosely. They should have spent the Lenten break reflecting on what Christ taught about the absolute importance of morality in society.

I’ve read an argument that public opinion doesn’t matter, and that the senators should ignore it in their judgment of Corona. But it does matter, the people must have faith and confidence in their court system, and particularly in the Supreme Court. More particularly in the head of that court. If the people no longer trust him he cannot function and he brings the whole court into question. Whatever the Senate decides he can no longer lead the court.

Corona must resign for the stability of the Judiciary. The very fact that he already hasn’t given all the controversy is itself reason he’s unsuited for the position. His ambition (evident in his acceptance of a midnight appointment) overrides his conduct as a gentleman. He may be as innocent as hell (a carefully chosen word) but no legal chicanery to claim him so will be accepted. This is a reality his lawyers might want to ponder.

Speaking of legal chicanery, how can the defense claim that it will prove Corona’s wealth was not ill-gotten (a newspaper report) when it was the defense that blocked investigation into the source of his wealth at the beginning of the trial because it “wasn’t in the articles of impeachment”. It wasn’t because its existence wasn’t known at the time the articles were prepared. Once uncovered, of course the source should be investigated as it’s very, very relevant to his honesty, or otherwise. His dollar accounts must be opened. But it doesn’t matter how much is in them, they weren’t listed at all in his SALN. That alone makes him guilty.

The President seems hell-bent in reforming the judicial system. I support that, as well as his single-minded focus on Corona as a start of this reform. Someone has to do it.

This is not a legal case. It is a test of the moral fiber of the nation.
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See also:
Corona Trial 1: Impeaching the SC Chief Justice, December 13, 2011
Corona Trial 2: Impeachment for Beginners, December 14, 2011
Weekend Fun 29: Corona Impeachment Cartoons, March 02, 2012


Rule of Law 12: Gloria Arroyo, Travel Abroad and the SC, November 16, 2011