Press Release
June 28, 2012

Excerpts from Kapihan sa Senado with Senator Franklin M. Drilon
28 June 2012

On Drilon's JBC nomination for the position of Chief Justice

Drilon: I have the mandate of over 15 million Filipinos who voted for me. I intend to finish my term in the Senate. And by the time I finish my term, I will have already reached 71 years old; so that disqualifies me. I like my work at the Senate. I can be of better service to the country as a Senator. I have been in the executive and legislative branch; I do not know that a change in career path when you are 67 is the most welcome development in your life. Sixty-seven na ako magpapalit pa ako ng bagong trabaho; ganunpaman, it's an honor. I thank those who nominated me (as Chief Justice). I intend to finish my term in the Senate, and as I said, it's more fun in the Senate.

On JBC selection process

Drilon: I would also like to comment on the on-going JBC process. First, this conflict whether there should be one or two members of Congress is a result of an error in the provision in the Constitution on the composition of the JBC. Originally, the legislative branch of the government, as contemplated by the Constitutional Commission, would have a unicameral legislature; therefore, in a unicameral legislature, we only have one representative in the JBC. It was ultimately decided by a vote of difference of one, that we will follow a bicameral legislature. The Constitutional Commission forgot to revise the provision on the composition of the JBC; and therefore, it remained "a member of Congress" which was strictly for a unicameral legislature.

This is the same situation as in the case of Congress acting as a Constituent Assembly. Under the Constitution, it says Congress, by three fourths vote, may propose amendments to the Constitution. It doesn't say "voting separately," and again, that phrase voting separately was not there because in the rush to amend the Constitution, to amend the draft after the decision to have a unicameral Congress was made in the last, hindi na po inilagay yung voting separately.

So, in at least in these two instances, the intention to have rather the concept of having a bicameral Congress was not reflected by these two provisions. There may be others in the Constitution but I can immediately cite those two. Now, when I was in the Judicial and Bar Council as the Secretary of Justice, for over four years until 1995, there were two representatives from the Congress at that time, but they were voting to only half a vote. There were seven votes, six from the regular members and ex-official members and one half each from the Congressman and the Senator representing the Legislative branch. When did that change? I do not know. On the issue whether it should be two or one, the JBC is presided over by the Chief Justice and there is a member of the court who sits as an adviser. You can assume, therefore, that the given situation, the Supreme Court is fully aware of this issue and I doubt it very much if they will change the system because this was done with the concurrence and consent of the Supreme Court that there will be two representatives of the congress that will be entitled to one vote each. So, the chances of it being reversed in my mind, is slim not because it is necessarily consistent with the provision of the Constitution but because the Supreme Court may rule that it was always the intent that there should be two members because this was the provision.

There should be two members because the provision was not adjusted when the shift was done from a unicameral to a bicameral legislature. I would support, in case there are amendments to the Constitution, a review of the composition of the JBC. I would be in favor of retaining the Judicial and Bar Council concept in screening appointments to the Judiciary. But, it can stand a review--after more than a quarter of a century of experience�we can draw from these experiences how we can revise the composition or the process that is now being followed by the JBC.

I am not in favor of returning to the old concept of requiring approval by the Commission on Appointments for appointment to the Judiciary.

I view with sadness the process that is now taking place in the choosing of the Chief Justice. There are more than 60 nominees, only 13 have accepted. Among those nominated were a nurse, a judge who was dismissed because he consulted dwarves and duwendes. It has become a circus. It's a sad commentary on the process that has evolved. I am not blaming anyone for this. I am just making a comment that it has become a circus, that it has become absurd.

Even requiring a psychological examination, which is a good requirement, but then the 23 senators should also undergo a psychological examination, the 270 congressmen should undergo a psychological examination, all the cabinet members should undergo a psychological examination, the President and the Vice-President as well. Lahat na dapat. Maybe the requirement should apply to all in this bureaucracy.

You cannot amend it (composition of JBC) because it's in the Constitution. The confusion of the composition of the JBC arises from the wording, which in turn is the result of the failure to correct the wording as a consequence of the shift from a unicameral to a bicameral system. The Supreme Court will have to decide on the proper case brought before it. But I don't think the Supreme Court has many choices. So, I would expect them to retain the present setup.

On live coverage of JBC process

Drilon: I am in favor of live coverage. The Commission on Appointments is open for media. There's nothing wrong with that. I am in favor of live media coverage.

On the JBC conducting psychological exams to Chief Justice nominees

Drilon: It's a good requirement but maybe this requirement should apply to everyone in this bureaucracy.

On the senators receiving their pork barrel after the ouster of former Chief Justice Renato Corona

Drilon: Correct, including me. It was a 2011 pork barrel pa and if you look at the senators who got their pork barrel, you cannot ascribe any political motive to it because senators from both sides received their pork barrel. I received my pork barrel. Sen. Miriam Santiago and Sen. Bongbong Marcos received their pork barrel so there is no political color to this. It is in regular course that these were released and I think what you should look at is how these entitlements are being utilized. That is where the concentration should be.

On the IMF Loan

Drilon: Let me emphasize that under Section 75 of the new Central Bank Act, Republic Act 7653, "Section 75. Operations with Foreign Entities. - The Monetary Board may authorize the Bangko Sentral to grant loans to and receive loans from foreign banks and other foreign or international entities, both public and private, and may engage in such other operations with these entities as are in the national interest and are appropriate to its character as a central bank. The Bangko Sentral may also act as agent or correspondent for such entities. Upon authority of the Monetary Board, the Bangko Sentral may pledge any gold or other assets which it possesses as security against loans which it receives from foreign or international entities."

So, there is an expressed authority from Congress through Republic Act 7653 for the Central Bank to be able to lend to IMF. It is clear that the Central Bank is authorized to grant loans to the IMF on its own without a need for an authority from the President. In my view, consider the following facts, consider the fact that the stability of the European economy is to our national interest. In other words, any upheaval or disturbance or instability in the European economy can affect us. Why? Our exports to Europe amounts $6.5 billion or 17% of our total export market per year. If the European market is unstable and will collapse, you can kiss goodbye this export market. $3.5 billion is the annual remittance of our Overseas Filipino Workers in Europe out of $20 billion annually.

Therefore, if the European economy will collapse, you would have these Overseas Filipino Workers losing their jobs. It is therefore to our national interest that we help in stabilizing the economy of Europe. Third, the Central Bank does not keep in its vaults $75 billion in Gross International Reserves (GIR). They invest our GIR in the world market because you cannot keep this in the vault. What the Central Bank did was to invest in the IMF debt instruments. IMF debt instruments is at par with US Treasury instruments. It is better than Japan and in Europe and this is an interest-yielding instrument. The IMF paper is rated Triple A better than many sovereign papers so it is very secure. Finally, what was lent to the IMF is not from the National Treasury. It is not part of the budget of the government of the Republic of the Philippines. This is part of our GIR and the Charter of the Bangko Sentral prohibits Bangko Sentral from lending to the Philippine government. All these indicate that there is no basis for all of these criticisms. This is governed by international market. You can go to other countries. They may yield 30% but this indicates how unstable it is. The higher the interest yield, the more risky the investment is. This is an investment in debt instruments which is accepted as a prudent banker would do. It is their duty to manage with prudence our GIR and keeping the international reserves in the vault without investing it is not a prudent way of taking care of our reserves.

On the government prioritizing the issues on poverty instead of lending to IMF

Drilon: We are continuing to address that but we cannot source it from the GIR because the law prohibits the Bangko Sentral from lending to the national government. Yes, poverty is continuously being addressed. The lack of classrooms is continuously being addressed. I devote a substantial portion of my pork barrel to building classrooms, to build over 1,500 classrooms using the Filipino-Chinese Chamber of Commerce and Industry. But the important thing is what was lent is not part of the budget of the national government because this is part of the GIR of the Central Bank which is invested on a regular basis to debt instruments.

On the interest the country is getting from investments abroad, can it be used for infrastructure?

Drilon: Hindi pwede, because kung ano ang kinita ng Central Bank, it should be declared as a dividend, because the Central Bank, under its charter and under the law, is required to remit dividends to the National Treasury.

What is remitted is part of the profit of the operations of the Bangko Sentral, they declared dividends out of that and therefore we benefit from it. If you recall, when I was elected as Senator in 2010 and became chairman of the Finance Committee, I settled the dispute between the Central Bank, the Commission on Audit and the Department of Finance on the manner of computing the dividends. Because of that settlement, I was able to have the Central Bank remit to the national government over P9billion of its profits in its operations from 2003 to 2006. Again, whatever yield these investments in debt instruments will make, is remitted to the National Treasury.

The dividend of the Bangko Sentral will become part of the revenues of the national government which will be used for its operations. Maliwanag na may kapangyarihan ang Bangko Sentral on its own na magpahiram ng pera sa IMF. There is no need for approval from the President. That is a power delegated directly by Congress to the Central Bank through RA 7653 (New Central Bank Act).

What is the difference between the international reserve and the profit of BSP?

Drilon: Nakuha ang international reserve sa export receipts. Sinu-surrender yung export receipts sa Central Bank. That is a reserve that the Central Bank would maintain in order to pay for imports. Usually, that is a rule of thumb. It is ideal that your international reserves should be able to respond to the import needs of the country, for say, about six months. We have about $77billion in international reserves.

On whether it is secure to lend money to the IMF

Drilon: Yes, of course it is secured by the fact that the rating of the IMF is Triple A. When you lend to the Philippines, what is your security? Nothing. It is the standing of the country in the international financial community, that is why the ratings become important. Because it is on that basis that the interest of the paper would be fixed. If you are a good credit risk, the interest that will be paid is smaller because the chances of default is very small. If you are a risky debt instrument, then the yield will be higher. That is why yung mga naghahanap ng medyo mas mataas na interest, kapag bumagsak yung bangko, wala silang masisisi kundi yung sarili nila dahil gusto nila mas mataas na yield. Syempre, yung nagbibigay ng mataas na yield, yung mga bangko na walang nagdedeposito.

On endorsing Ramon Magsaysay's candidacy.

Drilon: I am personally endorsing the candidacy of Ramon Magsaysay Jr. as part of the LP Senate slate. Ang tunay na Magsaysay ang aming kandidato. Si Ramon Magsaysay Jr.

On the official list of LP senatorial slate.

Drilon: The President has announced four names. You have Sonny Angara, you have Joel Villanueva, Risa Hontiveros and Ruffy Biazon. You would have the incumbents who would be part of our ticket, si Trillanes will be with our ticket. The other incumbents I cannot speak for them. Basically, that is the ticket right now. I am not in a position to give you other names but we have recommended that Ramon Magsaysay Jr. be included in the slate and he has the support of our party president, Mar Roxas and our vice president in the party, Butch Abad. The three of us. Magsaysay has accepted the endorsement. Of course, the final ticket would have to be decided by the National Council headed by the President.

Is there a possible alliance between NP and LP?

Drilon: I do not know, I am not in charge of that but I confirm that there are talks. What the status is, I do not know. I do not think also that it is possible for LP and UNA to have common candidates at this point because there are so many potential candidates angling for a few slots.

How formidable is UNA?

Drilon: They have a formidable ticket, many qualified people, so we leave it to the electorate.

On the Anti-Balimbing Bill

Drilon: I have supported it even in previous Congresses.

On the possible transfer of Senate

Drilon: The SP has authorized me and a committee composed of Senators Pia Cayetano and Ferdinand Marcos to start examining the possibility of moving to a new site. We are paying about P110 million annually as rental to the GSIS and this is not really an edifice originally built to house a legislative body. We look at three sites. The first site we looked at is the Film Center. The recommendation is not to go there because of questions pertaining to its structural capability. The second is the Post Office, but again we did not proceed because 1) it is too huge, 2) the location is not very ideal and 3) bumabaha doon sa area. Now, we will be examining the possibility of transferring to UP Diliman.

Again, we are just reviewing and examining the possible transfer, no decision has been made. It's on a preliminary stage, we have not gone beyond examining options. Another edifice we've examined is the Batasan where the Senate was originally housed, but hindi pwede because it is too small. One of the considerations is kailangangan malapit sa House of Congress kasi mahirap ang trabaho, mahirap ang coordination. We will be having our own building. That's (UP property) a public land. We can just use it or buy it.

On child labor

Drilon: This is a serious problem that we must look into. We must activate our inspectorate system in the Department of Labor and Employment. There are no excuses for having child laborers in our country. We have enough talent; we have enough manpower which are unemployed. Therefore, the use of child labors should not be tolerated.

One of the main factors is poverty when the unscrupulous employers will take advantage of poverty in order to exploit these children

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