Diosdado Macapagal's Fourth State of the Nation Address

Mr. Senate President, Mr. Speaker,

Ladies and Gentlemen of Congress:

Three years ago, on this very platform, we presented the Socio-Economic Program of the Nation designed to secure the objective of economic stability and growth of the country and the alleviations of the condition of the common man.

We were filled with conviction and enthusiasm; we were inspired with the bright hope that with the attainment of those objectives, national prosperity would be achieved and the level of livelihood of the masses of our people elevated.

The same optimism and conviction still inspire us as we look back in retrospect at the last three years. Despite the difficulties and odds that confronted us in the task of moving toward our desired goals, we submit that we have been able to accomplish tangible results in carrying out the fight against poverty by effectively laying the basis of future growth and progress in freedom.

FILIPINO WAY OF LIFE

We must begin with the fundamental act of casting a scrutinizing glance at the state of our way of life. It has become a truism that the Filipino way of life consists of three minimum elements, namely, the system of freedom, the love for peace and the sustenance of the rule of law. As long as these essential ingredients of Filipinism are safeguarded, the country, whatever its problems, is safe and the future of our posterity is secure.

As we perform our duty of rendering an account of our trust to our people, we are gratified that we have strengthened these fundamental tenets of our national life and destiny.

The system of freedom—we have restored free enterprise. We have upheld the freedom of the press and other media to the tolerance of license. We believe so firmly in freedom that given a choice between licentious freedom and restricted freedom, we have by deeds preferred license to restriction because of our conviction that in an aspiring democracy in Afro-Asia, licentious freedom is better than restricted freedom because freedom has the inherent virtue of restraining its excesses but restriction bears the danger of curtailment which may lead to tyranny and despotism.

Love for peace—this is exemplified in the doctrine sanctified in our Constitution which renounces war as an instrument of national policy. We have served the cause of peace in our land by capturing Jesus Lava, the top head and brain of the communists who seek to overthrow our peace and freedom.

Not only have we maintained peace and tranquility among ourselves but we have also been fortunate to be saved from the international turmoil that has beset our immediate neighbors like Vietnam, Laos, Malaysia, Cambodia, Indonesia, Thailand, Korea, Free China and India. We attribute this to our policy of firm opposition to international communism, aggression, subversion and infiltration in our country and to our security alliance with the United States and other free nations.

The rule of law—we all feel gratified that our people will not accept any system other than the rule of law which assures justice to the humblest citizen vis a viz the most powerful in the land. All have contributed to the impregnability of the rule of law in our society but we believe that the outstanding credit for this stability in our democratic institutions belongs to the Supreme Court under the leadership of Chief of Justice Cesar Bengzon all of whose members have upheld with zeal the inviolability of the rule of law in our free society.

Satisfied that we have bolstered the preservation of our free society, which is of overriding importance, we shall now review the results of our efforts in the last three years in the light of the goals that we have set and the conditions under which we were constrained to attain those goals for our people, deduce there from what remains to be done and draw a picture of the outlook for the future.

Free Enterprise and Nationalism

The things done which we shall speak of are the cumulative significance of the past three years. They were not the logical results of an economy allowed to maintain its sedentary pace in the mainstream of the status quo. Radical changes had to be introduced into the economic structure of the country. Drastic reforms in administration had to be undertaken, and tremendous efforts had to be exerted to provide the social services demanded by an expanding population in the face of inadequate resources.

The national objectives we defined had to confront, in their implementation, the reality of a situation the terms of which were not merely issues of the national condition but of the surrounding actuality of ourselves as a sovereign nation. We formulated those objectives at a time when the Philippine Republic had to exercise larger responsibilities within the Southeast Asian area as well as in the emergent community of the Afro-Asian continent.

It was for this reason that the most basic and fundamental change which was instituted by the Administration was to release the innate power of our people for progress by liberating the economy from controls and thus enabling our citizens to assume the major responsibility for national development.

The controlling idea of the Nation’s program of free enterprise that we launched was nationalism, and the goal of that nationalism was economic prosperity and enlarged freedom for the masses of the Filipino people.

ESTABLISHING THE BASE FOR SOCIO-ECONOMIC GROWTH

We shall now list the main results of our efforts on the progress of this program fro the people which we shall number one (1) to (109). The problem of restoring economic stability must inevitably lead to the necessity of creating an assured base for dynamic national growth.

Production

1)            In this connection, agricultural production rose by 4.8 per cent during crop year 1964, slightly lower than the 5.0 per cent increase registered the previous year. On the other hand, mining output increased 6.3 per cent over calendar year 1964, much better than the 1.5 per cent registered in 1963. Most encouraging of all, manufacturing production rose by 10.7 per cent for the first nine months of 1964, in contrast to the 6.4 per cent recorded the previous year. Production trends are, therefore, very satisfactory.

Credit

2)            On the other hand, the spurt in physical production was accompanied by a substantial increase in domestic credits which as of October 1964 had risen by 13.5 per cent over the previous twelve months, a development which requires close watch.

International Reserve

3)            In the external sector, foreign exchange receipts totaled $1,358 million or an increase of 17.4 per cent over the previous year. Foreign exchange disbursements amounted to $1,372 million, 19.4 per cent over 1963. Over the year, therefore, net foreign exchange disbursements amounted to $15 million. Correspondingly, the international reserves stood at $136 million by the end of 1964 compared to $147 million a year ago.

Infrastructure Program

The success in attracting an increasing magnitude of private investments in the Nation’s development efforts is to a certain extent dependent on the ability of the Government to lay the infrastructure conducive to enhancing investment possibilities in industry and agriculture.

Highways

The first area of priority was the improvement and expansion of our highway and land transport networks.

From 1962 to 1964, the Bureau of Public Highways undertook the construction and improvement of 7,633 kilometers of national, provincial, city and municipal roads at a total cost of P107.9 million in addition to 3,500 linear meters of bridges constructed and improved involving an expenditure of P22.6 million.

In 1964 alone, P13 million was spent for the construction of 913 kilometers of feeder and secondary roads and the paving or improvement of another 975 kilometers; while P420,000 was expended for construction and improvement of 435 lineal meters of small bridges. During last year, a total of 27,550 kilometers of combined national, provincial and city roads and 31,000 lineal meters of bridges were maintained and repaired with total expenditures of P52,625,170 under the Highway Special Fund.

4)            Among the major projects undertaken during the past three years in highway construction were the concrete paving of portions of the Manila South Road in Quezon, Laguna and Camarines Norte; the Manila North Road in Tarlac and Pangasinan; the Cabuyao-Calamba Road in Laguna; the Marawi City-Iligan City Road; the Balintawak-Novaliches Road in Quezon City; the Bagabag-Banawe Road in Nueva Vizcaya.

5)            Major asphalt road projects included the Baguio-Bontoc and the Benguet-Kalinga Road in Mountain Province; the Cagayan Valley Road in Cagayan; the Misamis Oriental-Agusan Road; the Surigao-Agusan Road and Iba North Road in Zambales.

6)            Some of the major bridge projects were the construction of the Catarman Bridge in Samar and the Tomacalao Bridge in Ilocos Norte, and the improvement of Del Pan Bridge in Manila.

7)            As of the present, a number of highway and bridge projects are underway. These include the widening of the Manila North Road from Tullahan Bridge to the Malinta Section in Bulacan; the improvement of the Dalton-Sta. Fe Section of the Cagayan Valley Road; the Cotabato-Davao Road and million-peso bridge projects in Nagtahan, Manila; Buntun, Cagayan; Sipocot, Camarines Sur; Bongabong, Oriental Mindoro: and Padilla, Pangasinan. The construction of an underpass in P. Burgos Street and the improvement of the Guadalupe Bridge in Makati, Rizal, will soon be started.

8)            On the Nation’s project of a Pan-Philippine Highway System, the existing kilometrage consists of 26,223 kilometers in Luzon, 16,446 kilometers in the Visayas and 13,462 in Mindanao or a total of 56,131 kilometers of which 16% was paved, 62% paved with gravel or stone and 22% is unsurfaced. In this System, there are 11,333 bridges with a total length of 240,525 lineal meters of which 155,790 lineal meters or 65% are of contemporary construction. The completion of this project requires the concreting of 3,003 kilometers during the period 1965-1969.

Flood Control and Irrigation

The second urgent objective was the expansion of flood control and drainage and irrigation facilities.

9)            About 232 flood control and drainage projects have been completed with 92 more in various stages of completion. These projects which are estimated to protect 155,000 hectares of valuable land involved an expenditure of P29.6 million in the past three years. Notable projects undertaken were the Solis-Tecson, Paranaque, Blumentritt and Reyes Severino drainage mains in Manila and suburbs.

10)         Five (5) national irrigation projects, serving a combined area of some 30,800 hectares, were completed during the same period. Construction of 13 other national irrigation projects, servicing an additional 60,000 hectares, are underway. In communal irrigation, 211 projects have been completed as of the end of 1964, with 25 others soon to be completed. These communal projects would add 60,700 hectares to our irrigated agricultural lands.

Electrification

Necessary to the program of socio-economic development is the task of power conservation and the scientific utilization of power for general well-being and public convenience.

11)         The thermal plan in Limay, Bataan, will have a 75,000 kilowatt initial capacity. Aside from increasing the power for the Luzon Grid especially during the dry season, this project will also serve the energy requirements of the Bataan Peninsula.

12)         Even as these projects are being implemented, the NPC is pursuing other functions in its continuing efforts to develop additional power projects. These consist of surveys, investigations, project planning, geologic studies and design. In 1964 alone, the NPC surveyed six areas, investigated 31 rivers, planned four large-scale projects for development and assessed an additional power potential of 80,000 kilowatts coming mostly from small streams. This has brought the total assessed water potential to 2,680,000 kilowatts, including 1,416,000 KW in Luzon, 104,000 KW in the Visayas and 1,160,000 KW in Mindanao.

Complementing the activities of the National Power Corporation in bringing the benefits of electricity to our rural populace is the Electrification Administration.

The 1960 census indicates that only 766,000 out of 4,648,000 total dwellings, or about 16%, were served by electricity; the remaining 84% of the populace, composed largely of rural dwellers, are without the benefits of electric service.

The capacity of the Electrification Administration to assist and encourage the establishment of a sufficient number of electrification systems has been seriously handicapped by the inadequacy of available funds.

13)         Since its creation, the Electrification Administration has initiated some 40 electrification projects ranging from 30-kilowatt to 300-kilowatt generating systems, financed mostly from its allotment for capital expenditures during Fiscal Years 1964 and 1965. This performance, although it underscores a conscious direction of efforts in pursuance of desirable goals, is still insufficient to meet our total requirements.

Obviously, nothing short of a nationwide crash program could forge a major breakthrough in this particular field.

14)         Therefore, we have initially provided for the acquisition of $5 million worth of equipment and materials from Japanese reparations. This initial equipment outlay, refunds, will be adequate to install electric systems in about 240 towns. Additional equipment would be installed in subsequent stages of the program.

The improvement and modernization plan for the Manila International Airport is being implemented with a loan of $5.6 million from the Export-Import Bank of Washington.

15)         In this connection, it is most gratifying to note that in our state visit to the United States last October, President Johnson manifested his interest in a nationwide rural electrification program as a possible area of American financial assistance.

But we are not yet satisfied with the above infrastructure development during the past three years. We are aware that there are still many projects which have been carefully planned but as yet not implemented due to lack of funds.

16)         In fact, we have programmed for FY 1965 the prosecution of several essential projects. There are projects involving a school building program, irrigation, rural electrification, road construction, airport and air navigation, and waterworks and artesian wells, the total cost of which would amount to about P486 million. But we regret to say that without any substantial increase in government income, we may not be able to start on many of these projects due to the non-availability of funds.

Finally, we are pleased to announce the successful public issue of $15 million worth of Philippine government bonds in the United States a few days ago; the issue was oversubscribed. Proceeds of this bond issue will be channeled to the NWSA expansion program and other priority development projects.

The success and the relative ease which characterized our foreign borrowing negotiations are strongly indicative of the soundness of our international credit position, the respect of other nations in our financial capabilities, and the confidence of these nations in our ability to adhere to our international commitments.

Incentives and Assistance to Industries

In the promotion of industrial growth, the government has provided a healthy investment climate through protection, incentives, and varied forms of financial assistance.

17)         Thus, in the case of the Iligan Integrated Steel Mills project, a half-billion peso undertaking designed to meet the country’s iron and steel requirements for industrial expansion and development, $62.3 million was obtained from the Export-Import Bank of Washington early last year.

18)         In the case of the coastwise shipping program, 40 million deutch marks were made available by the Kreditanstalt of Germany for loans to the private sector through the Development Bank of the Philippines.

The most significant of the tax exemption laws, however, is the Basic Industries Law. At present, about 50 basic industries have availed of the exemption privilege. The magnitude in absolute figures of the assistance given to these industries in terms of tax savings amounted to P46 million from March, 1963 to June, 1964. Under our Administration, the Nation’s small cottage industries have thrived and grown.

19)         The expansion program of the National Waterworks and Sewerage Authority was assured of $20.2 million from the World Bank.

20)         The U. P. College of Agriculture in Los Baños, Laguna obtained a $6 million loan commitment from the World Bank for the construction and improvement of its facilities.

21)         A $6 million credit line for the Ports and Harbors Program of expansion and modernization was re-negotiated.

22)         As of the end of 1962 when the new and necessary industries law terminated, 589 new and necessary industries were in actual operation, substantially developed and capable of operating without the need for additional assistance form the government.

NACIDA

23)         It should be mentioned here that the NACIDA, whose prime responsibility and function is the development of cottage industries, was established at the start of this Administration. After the first nine months of operation, the NACIDA registered a total of 1,770 cottage industries. For the past three years, NACIDA has conducted 410 researchers in foods, ceramics, fiber craft, wood, bamboo and rattan craft which have encouraged cottage industry activities along these lines.

Loans and Investment Council

24)         To coordinate the resources of the Government financial institutions for optimal effect, we established the Loans and Investment Council early in 1963. We are happy to report that the investment placements as of the end of 1964 of the member financial institutions have reached P3,538 million, an increase of 15.4 per cent over the previous year, and some 70 per cent more than the level of P2,077 million in 1961. Most of these funds have been used to finance vital agricultural, industrial, and commercial development requirements. The existence of the Council has also made possible syndicated financing by the member institutions for very large projects, where it might not have been possible for one institution along to bear the risk.

Such coordination never before undertaken has made possible the approval of the $62.3 million loan by the United States Export-Import Bank to the Iligan Steel Mills, and has facilitated the negotiations now going on between the Sta. Ines Steel Corporation and the Kreditanstalt of Germany. These two major projects when completed will supply the economy with 520,000 tons of steel products annually and will reduce steel importations by 80 per cent. The pace of industrialization will be substantially accelerated with these projects. Corollary steps are now being undertaken on the development of metallurgical coal, refractory bricks, the necessary technical services, as well as geological investigations and serial surveys.

Government Finances

In a country of scarce resources such as ours, it is imperative that public finances should be scrupulously administered so as to avoid situations where serious inbalances occur as a result of great disparity between income and expenditure.

Actual Income

25)         Since 1962, government receipts from all sources have risen appreciably on an average of about 17 per cent. From P1.2 billion in FY 1961, government collections increased to P1.6 billion in FY 1963 and to about P1.9 billion in FY 1964.

This gratifying performance was due mainly to the satisfactory efforts of the Government’s collection agencies.

26)         Gross collections made by the Bureau of Customs steadily increased from P564 million in 1962 to P631 million in 1963 and finally to P666 million in 1964. These figures show an increase of 11.9 per cent in 1963 and another 5.5 per cent in 1963 to 1964.

27)         Moreover, the Bureau of Customs intensified its efforts against smuggling as borne out by relevant statistics. During FY 1964, additional taxes and duties collected at the port of Manila from technical and pure smuggling amounted to P8.5 million which was P3.5 million more than that collected in FY 1963. Additional collections effected by reason of re-appraisal and/or reclassification of imported goods after examination for the last three years amounted to P56 million.

The performance of the other major collecting arm of the government—the Bureau of Internal Revenue—was also noteworthy.

28)         During the period from 1962 to 1964 gross internal revenue collection reached P3.6 billion as compared to only P2.3 billion collected for the period from 1959 to 1961. These figures represent a notable increase of P1.3 billion in collections. Significantly, collections from all major internal revenue sources registered increases thereby attesting to the efficiency of the administrative reforms implemented by that office.

In a developing country like the Philippines, the Government has the major responsibility of providing increasing service and social overhead projects designed to spur economic development.

Needed Income

For 1964 alone, a total P2.1 billion was spent for the purpose of operating the Government, providing facilities for peace and order and stimulating economic and social development. We must add that the expenditures of the National Government have been increasing over the years, and they will continue to increase as the population increases and the economy develops. In contrast, our income, even as it increases during the years, has not been of such magnitude as to cope with actual and programmed expenditure. Unless revenues are adequately augmented, it is estimated that from FY 1966 to FY 1970, a recurring revenue deficit averaging P425 million annually is likely to occur.

This projected deficit is based on the revised Five-Year Fiscal Program covering FY 1966-1970 of the operating departments and agencies and projections of revenues from existing sources. The gap would even be larger considering the new exemptions and use of funds for other purposes as contained in legislation passed during the last session.

Furthermore, if all the existing appropriations under the General Fund for this current fiscal year were taken into consideration, and considering that intensified tax collection has already raised collection by 17 per cent, the disparity between expected revenues of some P1.9 billion and statutorily authorized expenditures of over P4.0 billion in the General Fund alone would be impossible to bridge, and would be meaningless for operational purposes.

In the light of this situation, we would stress again our resolve to pursue sound and prudent fiscal policies.

29)         Thus, although the Government borrowed a gross amount of P377 million from January 1962 to June 1963, it redeemed P287 million.

In turn, it devolves upon Congress to tap new sources of revenue. When appropriation measures are passed by Congress, the Executive considers them not decisively from the availability of revenues but from the essentiality and importance of the service provided. It is the duty of the Government to provide and to find ways and means of financing such services which promote the public welfare.

Local Government Finances

30)         Moreover, the fiscal position of the local governments showed marked improvements. Real property tax collections for FY 1964 were P26 million more than the collections made during FY 1961. The total gross income from general fund sources of local governments in FY 1963 was P54 million more than the income for FY 1961. In addition, local governments received, as their share from internal revenue collections of the national Government, P318 million during FY 1963, representing an increase of P100 million over what they received in FY 1961.

The role of government corporations in the realm of economic development lies essentially in undertaking ventures in new and untried fields where the risks involved may inhibit private enterprise.

In this sense, therefore, government corporations play a pivotal role in the attainment of our development objectives, particularly in the areas of production and industrial development and social amelioration.

31)         The Cebu Portland Cement Company sold its Naga Cement Plant to a private corporation in August 1963 and since then has concentrated its activities to the promotion of the coal industry and coke processing. It has laid the groundwork for the establishment of a coking plant in Malangas, Zamboanga del Sur.

32)         As a significant social experiment aimed at improving the condition of labor, the Government effected the transfer of the NDC textile mills to its employees. The GSIS has sold 5 per cent of its shares in the Philippine Air Lines. Moreover, the GSIS has decided to sell its preemptive shares in PAL to the private sector as it is still considering the eventual liquidation of its shares in this airline company.

33)         While the transfer of the Iligan Integrated Steel Mills to a private group is being finalized, the National Shipyards and Steel Corporation have expanded dry-docking and shipbuilding facilities at the Bataan National Shipyards. NASSCO is now capable of undertaking repairs on Philippine Navy Ships, privately-owned inter-island and ocean-going vessels which before had to be serviced in Japan, Hongkong and the United States.

34)         A major undertaking of NASSCO now nearing completion is the Jose Panganiban project in Camarines Norte which is designed as the first modern pig iron smelting plant in the country for the processing of indigenous iron ore to pig iron.

The expansion projects of the Philippines National Railways (formerly the Manila Railroad Company) would extend its lines by 310 kilometers from Nueva Ecija to Cagayan in the North and the existing lines in Southern Luzon by 153 kilometers. Progress of these projects has been slow in view of financial stringencies being faced by the PNR.

35)         Procurement of materials and supplies for the Sorsogon project will be accelerated this year with the signing of a loan agreement with Japanese suppliers.

DEVELOPMENT OF AGRICULTURE AND NATURAL RESOURCES

At the root of the difficulties being faced by any developing economy is the problem of self-sufficiency in food, the ultimate necessity for life. The magnitude of this problem may be properly gauged when one considers that with our population increasing by 3.2 per cent annually, we have to feed 20,000 more mouths every week, or one million every year.

Increased Productivity in Agriculture

These considerations have spurred the Government to intensify its efforts in achieving greater productivity in food, particularly rice, corn, meat, poultry, eggs and dairy products. Of these, rice and corn, being the country’s primary staples, received the greatest concentration of the Government’s efforts.

Rice and Corn Production

36)         The rice and corn production program of the Rice and Corn Coordinating Council, involving various forms of assistance to farmers, yielded encouraging results. During the crop year 1963-64, assistance under this program was extended to 311,889 rice farmers with an area of 493,853 hectares and to 21,851 corn farmers with an area of 49,340 hectares. As a result, rice production in assisted areas increased from 14.8 million cavans to 24 million cavans, with the yield per hectare registering a remarkable increase of from 30 cavans to 48.55 cavans or by 61 per cent.

37)         Likewise, the yield of corn increased from 789,000 cavans to 1,480,000 cavans. This represents an increase of almost 100 per cent in yield per hectare.

38)         Apart from this continuing program to improve rice and corn culture, the Government also launched a crash program of rice production during the “palagad” season of from January to June, 1964, in order to offset, to the extent possible, the rice shortage of last year. This was participated in by fourteen cooperating agencies headed by the administratively created Rice and Corn Authority, with each agency taking charge of a specific function, from farm planning, fertilizer and cereal distribution, soil analysis, research, irrigation to administrative and statistical coordination.

The crash program covered 170,082 hectares in 42 provinces with 77,205 farmers involved. Although only about 20 per cent of the area was fertilized and 33 per cent chemically treated, the yield per hectare amounted to 48.4 cavans, as compared to the national average of only 28 cavans per hectare in previous years.

From the above results we can draw the assurance that, given the necessary implements and the means for carrying out far-ranging programs of this kind, the Philippines can eventually achieve self-sufficiency in rice. We are still stumped by the same problems—fiscal, organizational, logistical and other problems. More than anything else, the habitual typhoons and floods in the country have done much to negate our efforts.

The Government’s determination to pursue a consistent program of increased food production has been undaunted by these setbacks caused by nature, but the intensification of our efforts to expand the program to all areas is constrained by the Achilles heel of our developmental endeavor—lack of revenues. More funds than are currently available would be required to achieve the ultimate goal of self-sufficiency and thus enable us to depend on our own resources.

Our per capita consumption of meat, poultry, eggs and dairy products stands among the lowest in the world. In recognition of this deficiency, the Government has embarked on a long range program of propagating and improving our livestock and poultry population under the auspices of the Bureau of Animal Industry.

39)         Thus, the number of artificial breeding centers was increased from only two in 1961 to 22 in 1964; natural breeding services, from 3,639 to 6,624; and artificial breeding services, from 6,002 to 8,882. Likewise, the number of existing propagation stations was doubled in three years from 36 in 1961 to 72 in 1964.

40)         The Government has also imported pure breeds, notably cattle, swine and chicken, which were either dispersed, loaned out or sold for breeding purposes.

41)         In disease control, about 3 million livestock and 84 million poultry were vaccinated in the three years from 1962 to 1964, and some 23 researches completed for the improvement of animal breeds and the cure of diseases.

42)         Manufacture of biologics and sera has been maintained at an average of some 103 million doses annually.

We note with satisfaction that these activities by the Government are being augmented to some extent by private projects which are our prime hope for economic growth. There are now 24 feed manufacturers, three more than in 1961. Distributions of feed products are being facilitated with the increase in the number of retailers from 535 in 1961 to 782 as of last count. We have also seen the number of cattle ranchers increase in the last three years, from 312 to1,353, and the number of meat packing plants from 45 t o126.

43)         Farm-size animal and poultry raising projects likewise increased from 9,061 in 1961 to 18,902 in 1964.

44)         These activities have contributed in no small measure to the increase in poultry and livestock population for the period from 1961 to 1964 in these magnitudes; 22 per cent for carabaos, 26 per cent for cattle, 31 per cent for hogs, 24 per cent for chicken and 20 per cent for ducks. Not only have these increases cut down our import requirements of meat and poultry, but more important, they reflect a discernible breakthrough in our aspirations to bring our consumption of superior nutrients closer to Philippine nutritional standards.

Fishing

The creation of the Philippine Fisheries Commission during our Administration under Republic Act No. 3512 afforded the Government a more effective vehicle for launching an accelerated fisheries development program aimed at increasing fish production from both inland and marine waters.

45)         Corollary to the establishment of this Commission, an area comprising about one hectare of Manila Bay in Navotas, Rizal, was reserved as a fisheries development center by virtue of Proclamation No. 87, and earlier, Pier No. 14 was declared for the exclusive use of fishing vessels.

With these measures, the intensification of various fishery projects ensued in the following years. Fisherman’s wharves have been started in Barugao, Leyte; Gumaca, Quezon; Damortis, La Union; Baguey, Cagayan; Bayawan, Negros Oriental; and Guiuan, Samar.

46)         Under the joint auspices of the Emergency Employment Administration and the Fisheries Commission, 10-ton refrigerated ice plants for storage were constructed in Mercedes, Camarines Norte; Sagon, Negros Occidental; Barugao, Leyte; and Bayawan, Negros Oriental. Smaller plants with 6-ton capacity were put up in Guiuan, Samar; Magallanes, Sorsogon and New Washington, Aklan. Assistance was also received from the U. S. AID-ACA in the form of refrigerated equipment valued at $200,000.00.

47)         There are now almost 133,000 hectares of fishponds in operation involving a total investment of P265 million. Since 1962, a total of 941 fishpond applications has been received and processed, with an aggregate area of 34,670 hectares. Demonstration and experimental fishponds for bangos culture and other fresh water fish culture have been established in 36 areas.

48)         In addition to these measures, steps were also taken to increase output in existing resources. The use of purse seine for deep-sea fishing has been emphasized; from only 6 in 1961, there are now 23 purse seine in use, with sixty more expected to begin operation at the start of 1965.

We see in these the chance of achieving sufficient supply for our domestic requirements and the beginning of a thriving export industry for fish and fishery products.

Forest Conservation and Utilization

Our forest resources continue to play a dominant role in the economy, being one of its traditional major dollar earners and a natural protection from the destructive effect of floods.

Hence, the Bureau of Forestry has instituted a system of sustained yield management through the selective logging method which has evoked favorable reaction from various sectors as an effective measure of conserving our forest resources.

49)         The activities of the Reforestation Administration during the past three years have been geared to this same end. Between 1962 and 1964, some 88,852 hectares were reforested and 319,674 hectares placed under maintenance. During the same period some 2,703,000 liters of seed stock were sown in the plantations where now stand some 193 million living trees. Were it not for the damage wrought by strong typhoons in 1964, the results would have been much more.

Mineral Resources

The development, exploitation and wise utilization of the mineral resources of the country are a continuing responsibility of the government.

50)         From 1962 to 1964, geological and mineral surveys conducted by the Bureau of Mines covered nearly 3 million hectares. From these surveys were discovered the aluminous laterite deposit in Bucas Grande, Surigao, the magnetite (iron) beach sand deposits along the Luzon coastline, and the asbestos deposits in the Zambales-Pangasinan region. Detailed geological studies were also conducted on the chromite deposit in the Zambales region; iron deposits in Ilocos Norte, Camarines Norte, Rizal, Oriental Mindoro, Zamboanga City and Zamboanga del Sur; copper deposits in Negros Occidental. Exploration work disclosed substantial additional reserves of coals, asbestos, nickelliferous laterite, nickel ore and alumina laterite.

51)         Of far-reaching significance in the development of our vast mineral resources is the scheduled bidding for the operation of Parcel II of the Surigao Mineral Reservation, which contains an area of 40,000 hectares rich in supply of nickel deposits.

SOCIAL SERVICES AND WELFARE PROGRAM

Land Reform

In recalling the crusade of the Administration to promote the welfare of the common man, we must necessarily make reference to the enactment of the Land Reform Code for we consider this event as the milestone of our endeavors. The welfare of the common man has been and continues to be our central concern.

Despite the elimination of the Land Tax provision in the code, which could have provided adequate revenues with which to speedily implement Land Reform, we are happy to announce that the Government has been able with the meager finances available to gradually carry out its objectives.

52)         Through the National Land Reform Council, which coordinates the plans and activities of the different land reform agencies, we have been able to establish dynamic machinery which is capable, with adequate financial support, to transform the objectives of land reform into reality.

Visible implementation, however, has been limited due mainly to the inability of present government finances to provide the fund requirements of the Land Bank amounting to P150 million. Tangible benefits were largely the product of the Land Authority’s laborious efforts.

53)         The Land Authority has undertaken a program to increase the productivity, to raise the standard of living conditions of the beneficiaries and to improve the administrative management of settlement projects and landed estates which were taken over from the defunct NARRA and LTA. This program involves settlements and estates, having an aggregate area of 452,296 hectares which accommodate 48,520 families.

54)         In consonance with the objective of acquiring land for distribution, three agricultural landed estates with an aggregate area of 2,214 hectares have been expropriated, while the expropriation of 7 additional estates with a total are of 6,487 hectares is still pending.

55)         To give substance to our program of land for the landless, distribution of land was undertaken involving LTA estates. As a result, 250 agreements to sell and 29 transfers of rights were issued, while 485 deeds of sale and 29 transfers of rights were issued, while 485 deeds of sale were released. Furthermore, 340 sales applications were processed and investigated and 80 orders of award were given to applicants.

56)         The Land Authority has paved the way for the proclamation of leasehold areas in Plaridel, Bulacan; San Luis, Pampanga and at Concepcion, Tarlac. These land reform districts involve some 7,500 farmers cultivating an aggregate area of about 17,700 hectares of land.

These are concrete and tangible works which are eloquent proof of the government’s firm resolve to make the Land Reform Code a dynamic instrument for fighting poverty through increased production. They should allay all doubts on the feasibility and certain realization of our ambitious and goals.

But these activities, heartwarming as they may seem, cannot be used to validly excuse the neglect and failure in providing the Government with additional funds which could have been channeled, among other vital needs, to accelerate land reform activities. To render the program fully operational, a total appropriation of P597 million would be required.

Health

The problem of maintaining the nation’s health requires nothing less than unceasing vigilance.

There have been marked improvements in sanitation, community water systems, drainage systems, refuse collection and waste disposal.

In our effort to improve the nutritional deficiencies among Filipinos, we are continuing to implement the Rice Enrichment Program with inspectors being sent to the provinces to assure its success.

57)         Over the last three years, 74 hospitals have been constructed or improved at a cost of about P19 million. In addition, the facilities of existing government hospitals have been expanded and bed capacity increase.

58)         To further improve medical care to a greater number of patients, the Bureau of Medical Services has urged the growth and development of privately owned hospitals, which now number 238 and accommodate a total bed capacity of 10,811.

59)         Three Medical Centers (Baguio General Hospital, Southern Islands Hospital and Davao General Hospital), and 20 hospitals were developed as teaching hospitals.

The campaign for disease control has continued without pause.

60)         In Malaria control, we have developed a program which has been carried out with relative success. The morbidity and mortality rate from malaria dropped from 135.8 and 4.3 respectively in 1962 to 86.2 and 3.3 respectively in 1963 per 100,000 population.

61)         In tuberculosis control, over 3,000,000 patients were attended to by mobile units which covered a population of 9,000,000 people. Since 1962, 2,500,000 children were tuberculine tested of whom 1,500,000 were vaccinated with BCG. In large measure, this activity was the cause for the drop of tuberculosis mortality from 79.5 in 1962 to 72 per 100,000 population in 1963.

Education

We must face realistically the classroom needs for public elementary schools. There are now 15,032 temporary classrooms and 3,269 classrooms in rented buildings. Due to deterioration, 6,415 classrooms need to be replaced every year. Considering the annual increase of enrolment of 300,000 there is additional need for 5,454 classrooms or a total of 11,865 classrooms which are immediately needed. This need requires an expenditure of P52.5 million.

62)         In spite of revenue limitations, we affected an increase of P95 million in the 1964-65 outlays for education over that of 1963-64. The magnitude of this increase is accentuated by the fact that outlays for 1963-64. The magnitude of this increase is accentuated by the fact that an outlay for 1963-64 was itself P40 million over that of 1962-63. Within two years, therefore, outlays for education rose by 37 per cent.

Only by increasing the budget for education were we able to solve the recurring school crisis brought about by rapid population growth.

63)         The additional amount expended made possible the appointment of 39,575 new public elementary school teachers over the last three years and the opening or construction of 4,673 classroom units with the capacity of absorbing at least 187,000 additional students on just a single shift.

64)         It also provided every public school elementary and secondary pupil with at least three books, or a total of 16 million textbooks valued at P36 million.

65)         In the area of higher education, the progress achieved by the University of the Philippines is worthy of special mention. It has won the recognition and support of American foundations in an unprecedented manner and it has attracted Asian students in increasing number.

66)         Three additional state colleges were established during the period in review namely, the Mindanao Institute of Technology at Kabacan, Cotabato; the Central Luzon Polytechnique College of Cabanatuan City and the Don Severino Agricultural College at Indang, Cavite.

67)         Two universities, the Central Luzon State University in Muñoz, Nueva Ecija and the University of Eastern Philippines at Catarman, Samar have been elevated from College status.

68)         In the development of skilled manpower in agriculture, industrial, trade-technical, fishery and other vocational areas, it is heartening to report that whereas in 1961-62, the Bureau of Vocational Educational had 174 schools with an enrollment of 68,769; the school year 1964-65 finds it with 30 more schools and 17,988 more students.

69)         A significant contribution of the public schools to national production consists of their agricultural projects which involved the cultivation of 124,866 hectares producing varied crops with a total value of about P62 million. There are now 27,158 food production projects among public school students and personnel.

70)         To better equip our adult illiterates for greater opportunities, our education authorities have been implementing a program of adult education. About 18,242 adult illiterates have taken advantage of this program.

71)         To complement all these activities, there have been great strides taken to improve the private school system, the library network and the National Museum which is the repository of the national record and is charged with the heavy and crucial responsibility of “perpetuating all that is desirable in the national heritage.”

72)         Our education officials have expended a major share of their energies towards the upgrading of the quality of graduates through the revision of curricula and the selection of qualified personnel.

Housing

Many of us are aware of the fact that housing projects, both governmental and private, have literally mushroomed in the last three years.

73)         The enactment of R. A. No. 3469 was propitious for it made possible the construction of badly needed Multi-Storey Tenement Buildings with an initial appropriation of P15 million. The direct result is that the government is now in the final stage of completing the construction of for multi-storey projects which are located at Vitas, Tondo, Manila; at Punta, Sta. Ana, Manila; at the NDC Compound, Sta. Mesa, Manila; and at Fort Bonifacio, Makati, Rizal.

74)         Furthermore, we are implementing R.A. No. 3802 which grants tenants in all the PHHC’s housing projects the right to purchase their homes at cost thereby affording them the opportunity to become homeowners instead of mere lessees. As of last December, 617 families have been able to avail of this right. In furtherance of our housing program, the PHHC has sold, to date, 1,542 lots to prospective home builders.

75)         In addition, this Corporation is in the process of constructing six additional housing and sub-division projects in various provinces and has completed Housing Needs and Demand Surveys in various cities and towns in preparation for future activity.

Labor

76)         The Department of Labor in its role as conciliator has met with significant success. During the past three years, of a total of 1,572 cases which were terminated, 808 had the department’s active participation. Furthermore, it participated in most of the 918 bargaining agreements registered during the period.

77)         The past three years have witnessed a steady growth in unionism as proved by the 1,309 applications for registration of which 1,019 were issued corresponding certificates of registration.

78)         The Government is now embarked in implementing the new dimensions lent to our labor laws by the Land Reform program which extends the benefits of labor laws hitherto enjoyed predominantly by non-agricultural workers to agricultural workers as well. No less than 10,000 workers stand to benefit from Minimum Wage Order No. 1 which requires workers in the sugar industry to be paid P3.50 a day instead of P2.50.

Employment

Adding substance and meaning to the overall improvement in our economy is the gratifying knowledge that more Filipinos were able to find gainful employment over the last three years.

79)         From May, 1961, to May, 1964, there was a net increase of 1,178,000 in our employed labor force. During the same period, however, the labor force increased by 1,020,000. Thus, the unemployed to labor force ration dropped by 2.2 per cent from 8.6 per cent to 6.4 per cent. This is unmistakable proof that we have succeeded in arresting and even reversing our unemployment trend.

Minimum Wage

As the productive capacity of the economy grows, we should increase the earning power of labor. As a member of Congress, it was my privilege to be the main author and sponsor of the present Minimum Wage Law which fixes a minimum wage of P4.00 a day for workers. In the previous session, we recommended the raising of the minimum laborers’ wage to P6.00 a day or to such rate as Congress may deem just to both the laborer and the employer.

Social Welfare Administration

Child and family welfare continues to be the focus of the Social Welfare Administration since its ultimate aim is to achieve a higher state of well-being for individuals, families and communities. Implicit in this aim, however, is assistance to the destitute, the sick, the handicapped, the old, the homeless and the devastated.

The Social Welfare Administration has performed excellently during the past three years in spite of fund limitations that affect all government offices and in spite of the ever growing demands for its services.

80)         When typhoon “Lucille” struck in 1962, the SWA was the agency through which the sum of P14 million appropriated by R.A. No. 3467 was channeled to aid around 45,000 families, who were stricken victims of the typhoon.

81)         Moreover, the SWA has in recent years given material aid to the old, the handicapped, the sick and the needy, at a yearly average of some 70,000 cases. It has given rehabilitative and cash aid to 730,483 disaster victims and victims of dissident operations and other destitute families.

82)         Transportation aid was allowed to over 6,000 persons while financial assistance was given to over 2,000 self-help projects.

83)         It also rendered medical services to about 3,000 destitute patients a year and helped resettle over 1,300 families.

84)         Over the above this, the SWA handled an average 42,893 cases of families facing adjustment problems.

The task of screening the applicants for tenement housing called for by R.A. No. 3469 has likewise become this Agency’s responsibility.

National Integration

Through the National Integration Commission, the Government continued its efforts aimed at improving the living conditions of cultural minority groups numbering about 2.5 million people.

85)         During the past three years, gratifying improvements were made among the farm settlements where a total of 6,958 hectares were cultivated. In addition, 35,286 hectares were surveyed. We are glad to report that 5,452 families have been settled.

86)         The National Integration Commission built 33 kilometers of feeder and dirt roads and provided irrigation for 163 hectares in several reservations.

87)         The NIC has devoted a large measure of its resources and energies to afford education to many of its wards. Over the last three years, it awarded 2,780 scholarships. The Commission has supplemented this by erecting schools in settlements and the releasing funds to provinces with large cultural minorities.

88)         The Commission has released P33,405 for the construction of 12 Health Centers within the settlements which are staffed by Bureau of Health personnel.

COMMODITY ASSITANCE PROGRAM

RCA and NAMARCO

In line with our basic program of assuring adequate supply of basic commodities at prices within the reach of the common man, we have intensified the operations of the RCA and the NAMARCO of providing rice and other basic foodstuff at all times at reasonable and stabilized prices.

The NEC certified to an impending rice shortage for this year in the magnitude of 595,400 metric tons due partly to a series of unusually destructive typhoons which ravaged our crops. We are determined to find a solution to the problem of food shortage. We should not allow our people to go hungry. We trust that both houses of Congress share this sentiment.

89)         Primarily, we encourage domestic rice production by implementing a price support program through the RCA. This agency can claim the singular achievement of having raised the price of palay from as low as P8.00 per cavan to as high as P17.00 per cavan.

Nevertheless, the floor price for the rice support program of P12.50 is now inadequate and should be increased.

The palay growers being assured an adequate profit and incentive by the Government’s price support policy, it is our duty to assure the consumers rice and corn at all times at prices within their reach. Towards this end, the policy of government importation of rice until self-sufficiency is attained in order to meet any shortage in the domestic supply should be maintained. The authority of the Government to import rice to bolster the local supply in order to provide enough rice to the people at reasonable prices, not only in emergencies, should be restored. We should assure to the consumers, through a complement of local and foreign supply, at all times rice of at least the ordinary macan variety at not more than P1.00 a ganta.

The RCA’s other equally important effect is that it has been able to stabilize the price of rice instead of leaving both consumers and small producers at the mercy of middlemen and retailers.

NAMARCO

90)         The NAMARCO in line with its charter objectives imported and distributed during the last three years some $84 million worth of prime commodities such as canned milk, canned fish and canned meat, all of which were sold at or below landed cost to consumers throughout the country.

91)         At the same time, its distribution network was augmented with the appointment of over 14 thousand additional retail outlets. Through this wide marketing network, it was able to sell also locally manufactured canned food products in line with its program of assistance to domestic industries.

P.V.T.A.

92)         Since the start of our Administration, we have vigorously implemented R. A. 1194 which calls for government subsidy to stabilize the prices of tobacco and thus afford increased income to our tobacco farmers. We have done this despite the resulting heavy drain on government finances.

93)         We have also approved R.A. 4155 which improves the financing mechanism in support of the tobacco subsidy. Whereas before, the PVTA had to wait for releases from the Central Bank which resulted in prolonged delays in the payment of purchased and allocates about P80 million annually for this purpose. It likewise facilitates the gradual liquidation of PVTA’s enormous indebtedness with the Central Bank.

NEED FOR EFFICIENCY AND MORALITY IN GOVERNMENT

The Government is called upon to provide the major impetus to our social and economic growth.

For this reason we have striven to transform this Government into a flexible instrument of service; one that would be sensitive to the rising expectations of our people for a better life. This will explain our preoccupation with permeating all government offices and instilling them with integrity and efficiency.

Administrative Efficiency

We have pursued the objective of optimum efficiency in all government offices. Systems and methods were further refined and simplified and action guidelines laid down to minimize arbitrariness—a major cause of inefficiency and graft.

94)         Procurement and property disposal procedures were standardized and offices were more accessible to the public. The management system over Government property and records was revised. Due to all this effort we can claim that the present government machinery is in its most efficient and upright state since the Second World War; and we shall strive to improve it even further.

95)         An unheralded but typical example of our efforts for better public service is the “Operation Barrio Titulo” which was designed to deliver land titles otherwise lying idle in the Office of the Registers of Deeds to the very doorsteps of their rightful owners. From January 1, 1962 to September 15, 1964, no less than 19,519 titles have been distributed to farmers.

96)         The Civil Service Commission has been a major factor in this drive for greater efficiency. It has been instrumental in the dismissal of 177 government officials and employees and meting out lesser penalties to 477 others. Appointments made and approved in violation of Civil Service Laws and Rules were revoked. Performance ratings were improved and administrative discipline again became a reality to all government personnel.

Decentralization

Also important to the success of the Nation’s socio-economic program is the need for administrative reforms that would bring about more effective coordination among government offices and agencies commonly seeking the same objectives. Such administrative reforms could include decentralization of public powers to stimulate more participation in government by elective officials at the levels most proximate to the people.

Anti-graft Campaign

Realizing that efficiency and graft cannot coexist, the Government has intensified its exertions against erring officials and employees.

97)         Satisfied that corruption by high officials has been reasonably arrested, we have pursued our moral regeneration program to lower levels of government. Whereas the Civil Service Commission saw to it that only qualified men were assigned and retained in the service, the Presidential Anti-Graft Committee was assigned the task of checking, preventing and investigating government personnel and offices against charges of inefficiency and corruption. The Committee has caused the prosecution of 121 criminal and administrative cases. It has submitted 32 cases to the Civil Service Commission involving violations by public officials and employees of the Civil Service rules and regulations and performed investigations of anomalies and the evaluation of some 278 anti-graft cases.

However, strict control is held over this committee in order to avoid trespass against individual rights.

Anti-Smuggling

98)         The Armed Forces has assumed a major role in the effort to curb smuggling. Over P51 million worth of smuggled goods have been apprehended and confiscated.

Smuggling, in its varied forms, constitutes a grave economic and moral threat to the nation. The solution of this problem requires the cooperation of all the people by not creating the demand for smuggled goods and in assisting in the apprehension of smugglers.

Accordingly, we have strongly recommended the creation of an Anti-Smuggling Office which would be able to coordinate an effective campaign against smuggling. Although we have gained headway in our campaign against organized smuggling, much has still to be accomplished in the way of eliminating this cancer which continues to corrode our economic and moral fiber.

NATIONAL SECURITY AND LAW-ENFORCEMENT

Our program for national security calls for a minimum but capable force which can cope with any internal exigency and ready to respond t external challenges and commitments.

99)         The crippling blow to the Huk movement consisting of the captivity of Jesus Lava, was just a culmination of a three-year drive which netted a total of 699 Kuks and criminals either killed, wounded or capture in addition to the 1,632 others which saw fit to surrender. In the process, 4,472 firearms were rounded up.

100) Considerable headway was also made in combating cattle theft. Six hundred ninety-six rustlers were arrested and 1,544 animals recovered some 81 per cent of the total stolen.

101) Equally successful was the campaign against illegal fishing which resulted in the arrest of 2,675 persons and the confiscation of 82,149 blasting caps and 16,314 kilos of explosives.

Police Reforms

The dual function of maintaining the nation’s internal security and the promotion of peace and order has become the major responsibility of the nation’s armed forces. However, we feel that in securing peace and order, the greater responsibility should be shared by the country’s police forces.

Consequently, we should strengthen and improve our local police forces all over the country. We have recommended to Congress the enactment of a Police Reforms Law to ensure the fitness of those who are pledged to promote peace and order. We shall be happy to cooperate with Congress in the solution of this all important problem.

In this connection, we wish to commend the assistance being given by our civic-spirited citizens in combating crime, particularly the organization and active efforts of the Crusade Against Crime by Joaquin P. Roces.

NATIONAL PROSPECTS UNDER THE SOCIO-ECONOMIC PROGRAM

We have confined ourselves to statements of facts manifest in the progress of the Socio-Economic program for national development.

It may be recalled that when the Socio-Economic Program was presented to the Nation three years ago our overall target was an increase in gross domestic product at a compound rate of 5.5 per cent, as the unavoidable hesitancy that accompanied the transition to a decontrolled economy left its mark.

102) However, we are pleased to report to the Nation that for the second year of the Program, FY 1964, gross domestic product increased by 5.7 per cent, which is much closer to its target rate of 5.8 per cent; thus, the gap between achievement and aspiration is growing smaller.

The most immediate cogency and importance of the Socio-Economic Program of this Nation has been in being able to bring about a sense of prosperity which the tangible performance now promises to the Filipino people. The people are aware that what has been done so far are of immense implications for the state of economic and social institutions in the country. We feel that this sense of expectation has infused a new vigor to the Filipino people urging them to new heights of aspiration, giving them an assured basis for the steady vision of the good life and thus liberating the Nation from the lethargy that had held it as a consequence of the past colonial experience. A new condition of existence always proposes a new outlook and urges, in turn, greater strivings towards the ideals of increased social participation and responsibility.

Largely, this has been the moral implication of the Socio-Economic Program of the country to fight poverty through increased production. But in the greater political sense, it has also promoted an intense and responsible nationalism—a nationalism premised on the acceptance that while the Government must do all it can t enhance the general welfare, the state of the national society is a compendium of complex responsibilities in which everyone is to participate and exercise his right.

We believe that the Agricultural Reform Code has enhanced the faith of the Filipino masses in the Government, and by affirming the rights of the people in the face of an institution and social relationship established by the purposes of colonial regimes, the Agricultural Reform Code has provided the incentive for lawful assertions of individual rights, thus making it possible for the national society to conduct its various activities under the auspices of peace, freedom and security.

INTERNATIONAL RELATIONS

In foreign affairs, our conduct has been characterized by stronger assertion and greater involvement in the schemes of the Afro-Asian community in general and in Southeast Asia in particular. Our moral and political role has been accepted in Southeast Asia, and we have found identity with the Afro-Asian Nations in aspiration and ideals.

Our emphatic belief in the justice of our cause pressed us to intensify the Philippine claim over Sabah.

103) Our claim has been bolstered by the written support of Indonesia and the formal commitment of Malaysia to settle it by peaceful means, particularly through the World Court.

We are hopeful that the other Governments affected by our claim over Sabah, being like us adherents to the rule of law, shall pay proper heed to our just position to settle the matter through the World Court.

Let it be stated in this connection, however, that we did not allow this issue over Sabah to keep our relations with Malaysia in a state of strain. Mutual steps have been taken by the Philippine and Malaysian governments to improve relationship in a common desire to minimize possible areas of conflict in this already troubled region.

R.P.-U.S. Relationships

On the whole, the conduct of our relations with the United States of America has been carried out in the traditional spirit of friendship as befit two nations which have close historical ties and share common ideals.

This has been eloquently confirmed by the results of my state visit to that Nation last October. On this occasion, the Presidents of both the United States and the Philippines held fruitful discussion over mutual problems.

104) We also took this opportunity to conclude a Tax Treaty for the Avoidance of Double Taxation and the prevention of Tax Evasion.

105) In sympathy with our rice shortage, President Johnson donated on behalf of his Government, 25,000 tons of grain. He further pledged to make available 100,000 tons of rice to be purchased under the United States’ Pacific Law 480.

106) Let me also recall that it was under our administration that the late President John F. Kennedy signed into law U. S. Public Law 88-94 which amended the Philippine War Damage Act of 1962 and authorized payments of the balance of war damage reparations amounting to $73 million to some 88,000 claimants.

107) We would also like to point out the successful conclusion, early in 1964, of the Bilateral Cotton-Textile Agreement between the Philippines and the United States which resulted in increasing the quota of our exports of processed and manufactured textile to the United States. These and many other manifestations of effective cooperation attest to the existing firm basis of our relationship with the United States.

However, it has been almost two decades since we attained independent nationhood and world and national circumstances have changed considerably. The time has been reached therefore for treaties and relationships with the United States, which had been forged under conditions and events which are no longer present or intact, or whose compelling significance has greatly diminished in the face of current developments, to be scrutinized and updated in the light of present requirements for common security and benefit.

International Trade Promotion

The advent of decontrol stimulated a considerable growth in our exports and thereby necessitated the expanding of foreign markets for our products. To this end, we have intensified trade promotion efforts.

108) The Philippines signed an Executive Trade Agreement with Indonesia and concluded trade treaty negotiations with West Germany and Australia. A memorandum of Understanding with India was signed and discussions were held with the Korean Government to further improve the trade and economic relations between the two countries.

UNCTAD

Conscious of our problems as a developing nation, the Philippines participated actively in the United States Trade and Development Conference in Geneva last year.

109) during the conference, the Philippines was honored by the election of our head of delegation, the Secretary of Commerce and Industry, as one of the Vice-Presidents of the conference and who presided over four plenary sessions. Moreover, the Philippines was voted a seat to the World Trade and Development Board created to implement the resolution adopted by the conference.

ECAFE

In line with our policy to accelerate intraregional trade among Asian countries, Manila was made the site of the first ECAFE Ministerial Conference in December 1963 which adopted resolutions of far-reaching significance because they assured closer economic cooperation among the countries in the region.

United Nations

The grinding poverty of many nations and the terrifying progress of weapons development have given this world two crucial issues—the alleviation of misery of developing countries and the maintenance of peace.

In both issues, we believe that the United Nations and its agencies can and does play a paramount role. Because of this we have been and will persist in supporting and encouraging the activities of the United Nations and its agencies.

NEED FOR CONGRESSIONAL SUPPORT

Under our constitutional system, the Executive and the Legislative share the common responsibility for administering the affairs of the Nation as well as providing the guidance, service and leadership required by our democratic way of life.

In view of this constitutional scheme of collective responsibility, we submitted to Congress at the beginning of our term a blueprint for national development known as the Five-Year Integrated Socio-Economic Development Program. By this program, we addressed ourselves specifically to the three-fold objective of accelerating the development of our economy, improving the living conditions of our people, and providing a strong basis of dynamic growth.

To bring about joint Legislative-Executive action for the implementation of this program of development, we recommended, during the 1963 session, the enactment of thirty-seven priority measures, including those affecting revenue-raising, and other economic stabilization and developmental measures. Only four of these measures were passed during the regular session of that year.

The enactment of the Land Reform Code required the calling of a special session.

When this Congress resumed its sessions in 1964, the Executive again recommended enactment of the measures which failed to pass during the previous session, including several other bills relevant to the achievement of our socio-economic goals. Of these forty odd bills, only seven became laws which were bills of peripheral nature not designed to solve our basic problems. The more important and urgent bills were not acted upon.

It cannot be gainsaid that we have, time and again, pointed to the pressing necessity for enacting the major measures which could have provided necessary support to our overall socio-economic program.

The non-approval of these measures has resulted in denying to our country and people the funds necessary not only for the various infrastructure projects such as highways, airports, harbors, irrigation and power system, but also the essential elemental services of health, education, food and shelter. With the accelerated demands of the people for governmental services, coupled with our rapidly expanding population, it is obvious that more funds should be made available to meet the expectations of our people.

The lack of revenues has resulted in the deferment of essential and important public services The public school building program, the development program for higher education particularly the University of the Philippines, the training and mobilization of reserves for defense, as well as the development of the dairy industry are among those awaiting implementation. In the field of infrastructure, the construction of vital highways, airports, harbors, waterworks and irrigation systems, and rural electrification projects suffer delay. The salary adjustment of government employees, the pecuniary benefits due to veterans, widows and orphans, the payment of teachers’ salaries and general financing and nationalized schools, the law enforcement and peace and order operations of the Constabulary, and the development of Mindanao, among others, have yet to be fully implemented.

Not only has the revenue inadequacy impaired essential and important services and denied needed support to the public role in our economic program but also has withheld credit facilities available in government financing institutions from the private sector.

This need for increased revenue was appreciated by previous administrations and Congresses. A review of revenue measures enacted form 1950 to 1961 or during the incumbency of President Quirino, President Magsaysay and President Garcia graphically show that these regimes were beneficiaries of a liberal and realistic revenue policy. The margin fee as well as upward adjustment in personal and corporate income taxes, specific taxes on liquor and cigarettes, sales taxes on luxury and semi-luxury items, fixed taxes on businesses, occupations and professions contributed immensely to the operating and developmental funds of these administrations. On the other hand, since our incumbency in 1962, not a single revenue-raising measure, except possibly the revision of the Basic Industries Act and the imposition of a minor tax on logs, was enacted by Congress. In contrast, various tax exemption measures were passed which further depleted the already limited sources of funds available. The socio-economic programming has been denied the financial support envisioned by its planners and architects.

Within our limited powers, but acutely responsive to the hopes and aspirations of our people, we proceeded with the implementation of the socio-economic program. But ultimate success cannot be achieved by Presidential action alone; complementary legislative action is indispensable. Such indeed is the mandate of our Constitution. We submit it to be the inescapable duty of Congress to participate in a dynamic program of nation-building and public service through the enactment of legislation which would insure our continuing progress and the people’s welfare.

The Filipino People and Philippine Politics

In the coming months, the Nation is apprehensive that politics will occupy priority in the plans and activities of our national leaders. This situation is indeed far from ideal—certainly not the proper approach to the needs and exigencies of the times.

In a sense, it is perhaps proper that the Filipino people should feel a stake in the issues of our politics. These are times of challenges. We have seen the emergence of an Asian country, Red China, into an atomic power with all its ominous consequences. Within the context of the national society, we have to make a choice, a choice of which the odds should indeed be foreknown; for if ours be to make a decision between economic progress and the achievement of the good life for our people on one hand and economic stagnancy and the perpetuation of our traditional social ills in the status quo on the other, then the preference needs no further debate: our politics must affirm the interests and welfare of the Nation.

We can with sincerity say that the decisions of the Administration have been solely guided by considerations of public welfare. We have not hesitated to cross party lines in the appointment of individuals to vital offices when it was deemed that the general public should profit from the merits of these individuals. In conformity with the traditional features of a democratic society, we have necessarily to stand on the platform of a definite political party but we have also pledged the commitment of this party not to a group or an institution but to the well-being of the whole Filipino Nation.

We appeal, therefore, to the patriotism of all our leaders and people to act in concert and cooperation, to continue the tasks that have already been done in the interest of all and to join the Government in the implementation of those projects and programs necessary to national growth and development. Political parties, if they are to be representative of the general will and interests, should not allow themselves to be divided on intentions that seek the betterment of human life in the national society. Whatever disagreements we have, on the interpretation of motives and the necessary means for the attainment of the public good, such disagreement nevertheless must not conceal the facts of achievement nor endeavor to obliterate the tangible work that has already been achieve.

CONCLUSION AND RECOMMENDATIONS

The national progresses which we have endeavored to present are the cumulative results of the program we outlined in this platform three years ago. As we enter a new year, we have a justified feeling that even as there are tasks to be continued, a perceptible degree of change and reform has already been achieve within the national society.

Of course, there are the recurring problems and the programs yet to be started which are aimed at enhancing the national life and elevating the level of general activities in our society. But it should be undeniable that we have already realized a stage of development and progress, and if we say that reforms and continued dedication are still required, it merely indicates that there is only the logical trend to be pursued but that the general premise of growth and advancement has successfully been established.

The burden of responsibility, however, continues, and in this, Congress must share shouldering the brunt. Some of the vital reforms needed and which we have indicated in this address would require legislative approval of necessary measures. We fervently hope that Congress will provide the necessary support and collaboration. For even as the Constitution has wisely provided for a system of checks and balances, it surely did not intend that the legislative and executive branches of the government be mainly concerned with checking and balancing each other to the prejudice of the national welfare.

The Nation has already been set into an impetus towards desired goals. We have established the basis and condition for consistent action and now, more than ever, the Filipino people—the masses that had risked their lives for a conviction and so that a nation might be established—now more than ever, they anticipate that their leaders should not betray their trust, but that, instead, should work in cooperation to further what has been done and to pursue the logic of the performance that has been accomplished in the past three years.

Two years ago, we had summed up the government accomplishments of a year by saying that what matters is that we know that we are moving; that the status quo, in response to what have been instituted, is changing and is transforming the relationships within the national society into a condition vibrant to progress and development.

It is for this reason that we have appealed for collaborative endeavors and joint responsibilities. Let us, once again, manifest a solid nationalism and present our position as a Nation before the world with the full powers that come from having a national purpose and integrity.

We are a young and developing democracy in a region in which the free way of life to which we aspire as the means to our welfare is not indigenous. As such, we continue to grow as a Nation.

Our people are now matured enough to realize what is good for them and their children, which includes a reasonable measure of continued self-denial and sacrifice when necessary to promote the success of the Nation’s fight against poverty. They have become aware that progress cannot be achieved by conflict but by cooperation among their leaders whom they have invested with their sovereign mandate. If we are to heed the sentiment of our people and become faithful to their welfare, we must endeavor, whatever our parties may be, to work constructively and harmoniously together not to promote our personal interests, political or otherwise, but to advance the progress of our country and the prosperity, well-being and happiness of the greatest number of our people.

Indeed, the critical need of our Nation at this juncture of our history when we are on the crossroad or threshold of vigorous economic growth is national solidarity and unity. Now more confident than ever in handling the country’s varied and complex problems because of our experience in the actual conduct of the Presidency, we shall endeavor to achieve to the utmost possible a maximum of national solidarity and cooperative endeavor with a minimum of partisan differences as the most effective way of serving the needs of our people.

PROPOSED MEASURES

In view of the foregoing, we ask Congress to consider the enactment of the following measures in this session:

1)            To create incentives for investments and specifically clarify the investment climate in the Philippines and thereby delineate priority areas for both domestic and foreign investment activities in our country.

2)            To amend R. A. No. 1937, the Tariff and Customs Code, providing for authority of the President to modify tariff duties in order to extend and expand the authority in duration and scope granted to the President under Sec. 402 of the Tariff and Customs Code.

3)            To amend R. A. No. 1000, entitled “An Act Authorizing the President of the Philippines to issue Bonds to Finance Public Works and Projects for Economic Development, Authorized by Law, and for other purposes” in order to expand the Government’s borrowing authority to enable it to support more fully the Government’s investment program.

4)            To amend R. A. No. 16 entitled “An Act authorizing the President of the Philippines to obtain such Loans or incur such Indebtedness with the Government of the United States, etc.” in order to expand the Government’s authority to procure funds for economic development.

5)            To make credit available to investors within the framework of a stable currency and specifically to amend R. A. No. 337, known as the General Banking Act, in order to expand credit facilities by granting greater flexibility to the operations of commercial banks and enable them more effectively to support their functions of extending short-term loans.

6)            To finance specific public services, particularly:

a.             A bill to formulate a concrete highway program and providing revenues therefore by increasing the gasoline and oil tax rates.

b.             A bill to provide a school building program and providing funds therefore by revising the individual income tax in the upper brackets.

c.             A bill to promote national defense and security and providing revenues therefore by revising the corporate income tax in the upper brackets.

d.             A bill to promote agricultural production and productivity and providing revenues therefore by prescribing an impost on the main traditional exports which have received most the immediate benefits from the Government’s decontrol policies.

7)            To improve through statutory administrative reforms the intensified tax collection drive of the Bureau of Internal Revenue and Bureau of Customs.

8)            To create an Anti-Smuggling Office.

9)            To create a Rice and Corn Authority in order to accelerate self-sufficiency, to raise the floor rice for the procurement of palay from domestic growers and to ensure at all times the availability of rice and corn to the consumers at prices within their reach.

10)         To assure against a further rise of consumer prices in a manner consistent with the free enterprise economy.

11)         To provide reforms this will strengthen the local police forces in combating crime.

12)         To provide ready employment opportunities while stable jobs are being created under the economic program.

13)         To raise the minimum wage from P4.00 to P6.00 or to such level as Congress may deem just and fair to the laborer and the employer.

14)         To establish a National Housing Authority to implement a nationwide housing program for our slum and hut dwellers.

15)         To establish a Moral Commission.

16)         To decentralized the public powers in order to enlarge the participation in government of local elective officials most proximate to the people. Premised on a provision for supporting revenues, the salaries of municipal mayors should be raised and reasonable compensation or allowance provided for barrio captains.

17)         To reduce Congressional allowances to a level that would be satisfactory to the people.

With the expectation and hope that we have expressed, we face the tasks again with renewed confidence and determination, strengthened and revitalized by our abiding faith in God Almighty with Whose divine inspiration our efforts cannot be in vain.