text:
Manuel L. Quezon's Fifth State of the Nation Address

Gentlemen of the National Assembly:

You are convened at a time when many countries of the world are in the throes of war. The agonies which the nations involved in the conflict are suffering cannot but touch our hearts deeply. We sympathize with their sad fate and we pray to God that the tragic ordeal may soon come to an end. No nation, however far removed from the struggle, can escape its disturbing effects. Even we are experiencing the inevitable consequences of this war in the way of reduced trade with the warring nations and their neighbors, increased transportation and insurance rates, depressed prices for export commodities, and other intangible effects which result from a stoppage or a drastic limitation of world trade. Withal, we are fortunate that we are at peace and that it is the policy of the United States to stay out of the war. With that policy we are in full accord.

The United States Congress, in its last session, passed a neutrality law defining the obligations of the United a States towards the belligerent nations and prescribing, limitations upon commercial intercourse between them and the peoples living under the American flag. The Philippines is bound by that Neutrality Act, and our Government and people are fully cooperating with the United States Government in its strict enforcement. It is our good fortune to have in these very critical times, His Excellency, Francis B. Sayre, as United States High Commissioner to the Philippines. He is a scholar, a diplomat and a statesman. [Applause.] During the last three years he has been engaged in the study and consideration of our problems as Chairman of the United States Inter-Departmental Committee and of the Joint Preparatory Committee on Philippine Affairs. No one has labored more than he did in securing the approval by the Congress of the United States of the Economic Adjustment Act. He merits our gratitude for that signal service.

All the requirements prescribed by Congress for the effectiveness of the Economic Adjustment Act have been fulfilled. The Act, therefore, is now in full effect and all the agencies necessary for its enforcement have been set up. The quotas for different products provided in the Act have been allocated. It is my purpose to submit to you at an early date a definite proposal to permit the Government to lay the groundwork for the economic conference that is to be held at least, two years before the establishment of the Philippine Republic.

In your last special session, you approved laws to protect the people against profiteering during these war times, and to insure for the country a steady and sufficient supply of prime necessities and the continued operation of farms and factories. To accomplish the first aim, maximum prices for the most important commodities have been fixed and are being enforced. To attain the second purpose, the National Trading Corporation with a capital stock of P5,000,000 has been organized. A detailed report on these matters will be submitted to the National Assembly as required by law.

Pursuant to the provisions of Commonwealth Act No. 453, I have effected a reorganization of the Departments of the Interior, Agriculture and Commerce, and Labor. The National Information Board was abolished as a separate entity and converted into a division of the Department of the Interior. The activities of the various bureaus and offices under the Department of Agriculture and Commerce were properly coordinated, thus avoiding the overlapping of functions. The Bureau of Labor was abolished, and its work distributed among the various divisions of the Department, performing identical functions. The Division of Immigration was reorganized and its personnel increased with funds appropriated under Commonwealth Act No. 501.

We are making progress, however slowly, in our determination to raise the masses of our people to a position of relative ease. But our task is an extremely difficult one. Capital in the Philippines does not as yet seem to fully realize its obligations to labor and to society, and it will be necessary for you to enact after due investigation further labor legislations that will secure for the underpaid laborers higher wages and better living conditions, especially in the mining and sugar industries. [Applause.].

I regret that there are some labor leaders who insist upon resorting to strikes as the proper and best means of obtaining recognition of labor rights. Where, as in the Philippines today, the Government is earnestly endeavoring to help labor in its just claims, strikes are unnecessary and unjustified. Although the right to strike is recognized by law, strikes are, by their nature, a form of coercion, and once coercion is used by one party in, a conflict, it provokes retaliation by the other party. Hence, strikes often result in physical violence, sabotage, and public disorder. When such a situation arises, the Government is compelled to intervene, and when the Government intervenes to suppress violence and restore public order, it has to act swiftly under circumstances that often inflict loss or injury upon innocent parties.

Moreover, experience shows that the cost of strikes both to capital and labor in terms of financial losses, physical and moral suffering, and otherwise is enormous. Such loss, directly or indirectly, is shared by the whole community. Strikes should not, therefore, be used except as a last resort, for the settlement of industrial and agrarian disputes or for securing recognition of the rights of labor. Arbitration or adjudication by the Court of Industrial Relations has been found to be less wasteful and more expedient procedure for securing substantial justice. In any event, when a strike is declared, the use of violence or sabotage, by either side, will not be countenanced by the Government.

Our policy to acquire large haciendas with a view to their sale in small parcels to the peasants who work them and to purchase urban land to provide homes for the poor on easy terms is being effectuated. But here again we are met with serious difficulties in some instances, coming either from selfish and greedy landowners or from irresponsible and dishonest agitators. In the Hacienda de Buenavista in Bulacan, for a long time a focus of unrest and disturbances, some of the tenants who have been made to believe that they could become the owners of the land without paying fur it, are as yet not fully convinced that they have been deceived, and instead of welcoming the help of the Government, are either refusing to agree to the plan devised for the ultimate transfer to them of their landholdings, or in some other way trying to frustrate the plan. The management of the Hacienda, although carrying out the plan with firm determination, is showing extreme patience, because it is believed that these misguided people will sooner or later realize that we are seeking only their best interests and will then lend their full cooperation to the plan.

The Government has already purchased large parcels of land for homesites in Marikina, Rizal; San Pedro Tunasan, Laguna; and Dinalupihan, Bataan. Steps are being taken to expropriate the homesites in Malabon, Rizal. These purchases comprise lands owned by some corporations where people in large numbers have built their houses. We are trying to free these communities from the grip of absentee landlordism and to help them become owners of their homes, under terms and conditions that they can bear.

It is in the City of Manila where we are confronted with the most serious situation. Here the largest number of industrial workers live. Here, too, unemployment is at its worst. Individuals with no stable occupation but who can find work only occasionally, abound. The result is that in several sections of the city—Intramuros, Tondo, Sampaloc—there are many slums where the poor live under conditions totally unfit for human beings, crowded together in small quarters without sufficient ventilation or sanitary facilities.

In an effort to relieve Manila of a part of its congested population that can conveniently go to live in Quezon City, we have purchased a large parcel of land, known as the Hacienda de Diliman, with an area of about 1,600 hectares. The plan is to offer to government officials, especially the small salaried employees and laborers, for sale or rent, lots where they can build, or have the Government build, their homes. In the subdivision of this land there will be portions which may be acquired by private individuals, both the rich and those of moderate means. There will also be sections set aside for industrial establishments. This project which we have placed under a most capable management, at no cost to the Government, is in process of execution. Roads are being constructed and lots subdivided; model houses are being built and in due time the lots and the houses will be ready for sale. But this project cannot by any means solve the problem of the slums, nor provide decent homes for all line poor living in the City of Manila and its vicinity. In the first place, Diliman is too far for those laborers who work in or around Intramuros and Tondo. In the second place, if all the people residing in the overcrowded districts were to go to Diliman, there would not be sufficient room for them. From the reclaimed area in the North Fort, fifty hectares or 500,000 square meters will be reserved for the fishermen of Tondo, Pasay, and Baclaran, as well as for laborers in the water-front. But even with this plan, which will be in the course of execution next year, we shall not be able completely to do away with the slums or to have all the residents of this city live under proper sanitary conditions.

We must expropriate more land. Fortunately, there is more than enough unoccupied land within the radius of the city itself and its immediate surroundings that can be used for this purpose. But the prices of these lands have been unjustly boosted by their owners. The increase of population and the public improvements made by the Government are being taken advantage of by these land profiteers to exploit the public. These lands have been held unimproved all these many years. Their owners have valued them for purposes of taxation at incomprehensively low prices, and now for lands that are assessed at four centavos per square meter, the owners are exacting from the Government or private individuals a price of three, four and even more pesos per square meter. This should not be tolerated.

While it is our purpose to maintain inviolate the right, of private property, we must not pay more than what is just compensation therefore, taking into consideration the value at which the property has been assessed upon the owner’s own declaration or with his consent. I recommend, therefore, that the Assessment Law be amended by providing that whenever an assessment is made for the purpose of imposing the real properly tax and the same is not protested by the owner thereof, within a specified period after receiving notice of the assessment, said owner will be deemed to have agreed and accepted the valuation as the just and fair value of his property, and that, in case of expropriation proceedings by the Government or its instrumentalities, the assessment shall be taken as prima facie evidence of the value of the property. I likewise desire to submit to your consideration the need of imposing special assessment tax upon real property that have greatly appreciated in value as a result of the construction by the National Government of roads or other public improvements. The owners of such properties have no right to enjoy the extraordinary rise in value or the increase in the income, without contributing proportionately to the cost of said improvements.

There are many cases involving the ejectment of poor people who have built small houses on unimproved lands with the consent of the owners thereof. Because of the construction of public improvements, the value of these lands has risen suddenly and the owners are demanding prices which are far beyond the ability of their tenants to pay. It is cruel to permit the ejection of these poor people and to have their houses destroyed, thus leaving them without shelter. The National Assembly should consider the advisability of amending the existing law regulating ejectment proceedings so as to protect such tenants by prohibiting their ejectment until the Government has had opportunity to take care of them.

Unemployment continues to be one of the main problems of the Government, and that problem, in all likelihood, will confront us for some time to come. For the purpose of assisting the Secretary of Labor in the study of this matter, I have created an Advisory Board on Unemployment; and, as an aid to the solution of the problem, or at least to prevent its aggravation, I recommend the enactment of immigration laws that will place limitations upon foreign immigration thus protecting Filipino labor from alien competition. We should, however, do away with the existing discrimination against Orientals, it being unjust and unfair to close our door to races which are akin to ours.

The fiscal operations of the Government during the past year have been satisfactory. Revenues have exceeded ordinary expenditures during the last fiscal period by P6,928,977.45, although this excess and a part of the accumulated surplus were used to cover extraordinary or nonrecurring expenses amounting to P23,927,909.43. Actual collections exceeded budgetary estimates in the amount of P5,323,573.66. The condition of the excise tax fund will be reported to you in a separate message. The public debt has been reduced as required by law and is now only P79,582,982.84, as compared to P95,076,798.27 in 1935. This public debt will be more than amply covered from the proceeds of export taxes provided in the Independence Act, accruing before 1946. In addition to this public debt, however, the Manila Railroad Company has an outstanding obligation in the amount of P26,472,000 for which no sinking funds are being provided. In order to protect the credit of one of our most important enterprises, the Government will have to assume the payment of this debt maturing in 1956. I recommend that the National Assembly consider a plan establishing a sinking fund for these obligations from the proceeds of the excise tax in the event the Manila Railroad Company is unable to provide therefore.

The business corporations of the Government have been operated efficiently and in the public interest. While the National Food Products Corporation is still operating at a loss, the Cebu Portland Cement Company, the Insular Refining Company, the Manila Port Terminal, and the National Bank have ail made substantial profits during the past year. The National Development Company has also made a profit from its own operations as well as from its operations as a holding company.

The Agricultural and Industrial Bank has been organized and is now in operation. The main purpose of this bank is to help agriculture and industry, chiefly in the establishment of new industries, the production of new crops and the extension of cultivation and diversification of products in farm areas.

The National Power Corporation has decided to undertake the development of the Caliraya water project. The construction of this project is under way. The bonds issued by the corporation to finance this enterprise were oversubscribed.

The exploration of our oil resources is being pushed forward as rapidly as possible and within a few months the geological survey will be completed. As soon as the result of the survey is available, it will be time to decide whether drilling operations should be undertaken by the Government or by responsible private companies.

The Government has been giving impetus to the organization of cooperatives for consumers, producers, and small merchants to eliminate middlemen and needless entrepreneurs. This form of economic organization has been successful in other countries, and I can see no reason why it will not meet with the same success in the Philippines. It will probably take time to educate our people on the value of cooperative effort, with the discipline and intelligent collaboration required by that method of economic endeavor. We have to contend with the apathy prevailing in certain groups as well as with old practices and traditions which are both uneconomic and otherwise undesirable. But I have faith that these difficulties will be overcome. The successful operation of these cooperatives will aid in a great measure in the solution of our economic problems and in the ultimate stabilization of our national economy.

Retailers’ cooperatives are being organized in Manila and in the provinces. The Buenavista Cooperative is in operation. The shoemakers of Marikina and neighboring municipalities have likewise been organized into a cooperative association to permit them to own and operate the industry themselves. It is my opinion that the same thing might be done with regard to hat-makers. The Hemp Corporation is undertaking the organization of cooperatives among hemp producers. The same thing will be done with respect to coconut producers.

The coconut industry has long been suffering from depressed prices. This is partly due to inefficient methods of curing copra, lack of credit facilities, and faulty system of marketing. It is also attributable to the failure to utilize the by-products of the coconut. In view of the authorization granted in the Economic Adjustment Act, permitting the use of this excise tax on coconut oil for the purpose of improving the curing of copra and the granting of crop loans to coconut producers, I recommend that the National Assembly pass a law allowing the organization of a corporation for these purposes. [Applause.]

The tobacco industry is going through a most critical period; booth in the factories and in the fields. Prices for leaf tobacco are even now not sufficient to insure reasonable returns to farmers, and with the gradual loss of foreign markets, the situation will aggravate. Cigar makers are suffering from low wages, partly because we have not been able to find enough markets for our high-priced cigars.

The Government is undertaking a serious study looking to a solution of the problems confronting this industry, and I recommend that you consider the advisability of authorizing the creation of a tobacco corporation that will provide credit to farmers, aid in the proper curing of leaf tobacco, improve the quality of tobacco and cigars, and stimulate the production of cigarette tobacco. This corporation, when organized, could take over the duties assigned to the Tobacco Board in the investment and disposition of the funds collected from inspection fees. The Warehousing Corporation has under construction eleven warehouses for rice, copra, hemp, and tobacco, and others are being planned. The purpose of these warehouses is to provide storing facilities for producers, meantime permitting them to obtain credit on the security of their crops.

The Koronadal land settlement project in Mindanao has been started. There are now approximately 2,000 men in that territory. More are going at the rate of 250 every month. An irrigation system has been built and experiments have been conducted covering different crops. The results thus far have been most encouraging, and the program for this year is to place, under cultivation in that area, no less than 3,009 hectares. Everything is being done to safeguard the health and well-being of the settlers.

I wish to invite attention to the economic adjustment projects recommended in the report of the Joint Preparatory Committee on Philippine Affairs. Some of these projects are in process of execution; others are still in an experimental stage or under study. In order to properly carry out the plan to promote new crops and greater diversification of products, it is necessary, as recommended by the Joint Preparatory Committee, that we establish, as soon as possible, adequate agricultural, experimental and demonstration stations. The existing stations, maintained entirely with funds contributed by provinces and municipalities, are inadequate. It is not possible to conduct experiments in so many stations which are insufficiently financed. Moreover, the necessary trained men for the operations of these stations are not available. I recommend that the National Government assume full responsibility of establishing and operating experimental and demonstration stations in carefully selected places in order that the experiments and demonstrations may be conducted on a more scientific and systematic basis.

Closely allied with the problem of economic adjustment is the question of scientific research. I desire to reiterate my recommendation in a previous message to the National Assembly to consolidate all the agencies of the Government engaged in scientific research into one scientific research institute, using the Bureau of Science as a nucleus for the purpose. The expenses for its operation may be covered with the funds appropriated for the Bureau of Science and the other agencies of the Government dealing in research. This project has been strongly recommended both by the Department of Agriculture and Commerce and by the National Economic Council in view of the report submitted by Dr. Raymond Bacon who was employed by the Government to study this matter.

It is necessary to expand the activities of the Bureau of Commerce to enable it to cope with the increasing demands of our growing trade. Division for the promotion of exports and for the stimulation of local trade should be organized in that bureau. To protect the rights of inventors and manufacturers, a patent office should be established.

One of the most important but neglected industries is our fishing industry. To enable the Government effectively to promote this industry and to exercise the necessary supervision and control over the same, I propose the conversion of the present Fish and Game Administration Division into a bureau under the Department of Agriculture and Commerce.

It is hardly necessary to emphasize the importance of organizing an office to collect and compile statistical data for the use of the Government and the public. The Census Commission, after it has completed its work, should be converted into a permanent bureau to render that service.

Many public improvements authorized by the National Assembly were accomplished during the year that has just ended. First-class roads were increased by 208 kilometers, second-class roads by 878 kilometers, and third-class roads by 854 kilometers, thus making a total of 21,166.1 kilometers for all classes of roads, of which 10,310.4 are national roads and 10,805,7 provincial roads. Many public buildings were erected, including 386 school houses.

Our system of transportation has been greatly improved and extended. The railroad to the Bicol provinces has been completed and opened to traffic. Many bridges and port facilities have been built, and new boats have been added to the coastwise and interisland shipping. The number of ships under Philippine registry engaged in overseas trade has increased, and three new ocean-going steamers are now in the service. This fact should be a source of satisfaction and benefit for our country, not only because it will permit the carrying of the Filipino flag to distant lands, but also because it will help in insuring sufficient bottoms to carry our exports to foreign markets, particularly during the present emergency. The Government, however, is not contemplating the acquisition or operation at least during the next few years, of ocean-going steamers.

The Department of National Defense, created by Commonwealth Act No. 432, was organized, effective November 1, 1939. This new department has executive supervision over the Philippine Army, the Bureau of Aeronautics, the Bureau of Coast and Geodetic Survey, the Philippine Nautical School and over the establishment and operation of all radio stations other than those maintained by the Bureau of Posts. As the appropriation used by this new Department for the current fiscal year was taken from the forced savings in salaries and wages and sundry expenses of bureaus and offices under the Office of the President, it is recommended that adequate appropriation be provided for this Department for the coming fiscal year.

There are at present 363 officers and 3,735 men in the regular army and 4,829 officers and 104,412 men in the reserve. This shows that the youth of the land have responded patriotically to the call of duty and indicates how much has been accomplished in the execution of the National Defense Program.

Substantial progress is being made in public sanitation and in providing the poor with medical service. But there are still a number of provinces that do not count with proper hospital facilities. With the aid of the National Government, a more generalized program of hospital construction is being gradually carried out.

More funds should be appropriated for the care and protection of the under-privileged—the aged and infirm, the dependent and the destitute, as well as the neglected and the delinquent, the physically and the mentally handicapped children.

The extension of opportunities for public education to all children of school age continues to be one of the major problems of the Government. Despite the opening of 3,600 extension classes and the construction of new buildings, there are still many children of school age out of school. The difficulty of the problem lies not so much in the shortage of funds as in the insufficiency of professionally-trained teachers. I have appointed a Joint Educational Survey Committee for the purpose of studying and recommending a solution for the recurring school crisis.

Greater importance is being given to character and civic education and the fostering of patriotism among the children and the youth. For this purpose, a code of citizenship and ethics has been promulgated and courses of study on character and civic education are being revised.

There is a growing popular response to the work of the Office of Adult Education as shown by the fact that there are How over 4,000 schools for adult citizens.

The survey conducted by the Board of Regents with the advice of two outstanding educators from the United States on the needs and problems of the University of the Philippines has been completed, and many of the recommendations are being put into effect. The transfer of the institution to the new site in Quezon City will proceed as rapidly as circumstances will permit.

In order to meet the need of our industries for technological service, it is advisable that we increase the number of government scholarships abroad. From the appropriation at our disposal, we are able to grant only twenty scholarships every year. The better to carry out our program of economic development, this number should be increased.

For the first time in our judicial history the Supreme Court has brought its docket up to date, while the Court of Appeals is fast moving to clear its own calendar of cases. The Supreme Court has not only decided many important questions but also enunciated constitutional doctrines that have far-reaching effect. In addition to this noteworthy accomplishment, the Court has recently promulgated the Rules of Court, which constitutes a revision of our procedural laws designed to expedite litigation and to render less expensive but more efficient the administration of justice.

As a consequence of the enactment of Commonwealth Act No. 177, carrying out the Constitutional mandate to extend the merit system to all branches and subdivisions of the Government, the selection of employees, not only in the national but also in the local governments, has been based on the merit system and practically all government employees are new in the classified civil service. All positions in the Government have been classified and salaries standardized as required by the Salary Law.

The volume of work in the Office of our Resident Commissioner at Washington is continually increasing as a result of the supervision of that Office of the various interests and activities of the Commonwealth Government in the United States. Whereas in the past the work of the Resident Commissioner was limited to his congressional duties, it has become necessary since the establishment of the Commonwealth to entrust him with other duties as the representative of our Government in America. He has to supervise the work of the insular purchasing agent and the tobacco agent, take charge of matters relative to government pensionados, disseminate accurate information about the Philippines, promote Philippine trade, and look after the interests of Filipinos residing in the United States and territories. It is recommended that the appropriation for the Office of the Resident Commissioner be increased sufficiently to enable it to discharge efficiently these new duties and responsibilities.

The provinces, cities, and municipalities have maintained a sound financial position. The revenue laws recently passed by the National Assembly will increase their income by approximately P10,000,000 which will be twice as much as they used to receive from the cedula tax. The municipalities, however, are meeting Serious difficulties m balancing their school budget. The total estimated deficit of municipalities for current expenditures in the school fund is around P500,000. This deficit could be met by the repeal of the provision of the new Real Property Assessment Law reducing to 50 per cent the valuation of coconut, hemp and other similar improvements. There is no justification for such a provision, considering that there is now being undertaken a revision of property values which is the best means for a proper assessment. This conclusion becomes more evident when it is considered that some provinces have only recently reduced the assessment of such improvements adjusting it to present conditions, as in the case of the Provinces of Tayabas and Laguna. I urgently recommend that the National Assembly take early action repealing that provision.

On September 15, 1939, the National Assembly adopted a resolution proposing important amendments to the Constitution. I refer to the amendments establishing a bicameral legislature, changing the tenure of office of the President and the Vice-President, creating an independent Commission on Elections, and fixing a compensation for Senators and Representatives higher than that now received by the members of the National Assembly. By Commonwealth Act No. 492, it is provided that these amendments shall he submitted to the people for their ratification at the next general election for local officials. After hearing the views of provincial and municipal officials and the members of the Council of State, as well as other persons who have no partisan interest, I deem it my duty to recommend that the law be amended so as to authorize the holding of a plebiscite on these amendments on a date different from that fixed for the election of provincial and municipal officials. While this may entail more expenses for the Government, I believe that the change is imperative from the standpoint of public interest.

The proposed constitutional amendments are in effect a revision of the present Constitution, and the resolution proposing the same clearly contemplates that they should be submitted to the people in an integrated form. The amendments so affect the entire document and in this sense are so interrelated as to preclude any manner of having them voted upon separately or severally.

The importance of these amendments requires that they be submitted to the people for ratification or rejection squarely and without the introduction of extraneous and irrelevant issues, and this would be impossible if the plebiscite were held on the same date as that set for the next regular election of local officers. The proposed amendments affect only the national Government and should be acted upon by the voters independently of local political interests or considerations.

The conquest and subjugation of formerly independent nations, the invasion by strong powers of insufficiently defended territories, the not infrequent disregard of international covenants and laws have of late caused great anxiety in the minds of many people both in the United States and in the Philippines, and not a few of them are raising the question whether it is the part of wisdom to carry out the plan already agreed upon of establishing the Philippine Republic in 1946.

No one can feel more keenly than I do the responsibility for the future of our people. The sacred duty of leading our Government through these first years of preparation for an independent national existence has fallen to my lot, and I have tried to discover by every means at my disposal if there be any compelling reason why the plan as decreed by the Congress of the United States and accepted by us should not be put through. I am of the opinion that the international situation has not developed to a point where anyone can predict what the fate of small nations will be in the years to come.

In the discussion of a possible change in the program of independence embodied in the Independence Act, it is important to bear in mind the following considerations:

First. That the Government of the United States will not consider favorably any proposal merely to postpone the granting of independence beyond 1946, meanwhile continuing the present political and economic set-up in the relations between America and the Philippines.

Second. That if the Filipino people are unwilling or afraid to assume the responsibilities of independent nationhood by 1946, their only alternative is to petition Congress to declare the Philippines permanently as American territory.

Third. That America will not assume the obligation to protect the independence and territorial integrity of the Philippines against foreign aggression.

In the face of these considerations, the question for us to decide is whether because of the uncertainty of the future of small nations, we should abandon the idea of becoming independent.

I am unalterably opposed to the prolongation of the present political set-up beyond 1946 [Applause], because I believe that it is not conducive to our best interests. On the other hand, we cannot consider permanent political relationship with America except on the basis that the Philippines would at least have full and complete power over immigration, imports, exports, currency and related financial subjects, as well as the right to conclude commercial treaties with other nations, without being subjected to the supervision and control of the United Slates. [Applause.] This, I am quite certain, is not feasible, considering the present state of public opinion in America.

It would be utopian to believe confidently that the Philippines would not be exposed to foreign aggression, once we cease to be under the protection of the American flag. But, if we want to have the untrammeled right to govern ourselves as we think best for our own welfare, we must assume the responsibilities that go hand in hand with that right. [Applause.] That means that we shall have to depend upon ourselves and take our chance exactly as every independent nation had to do.

We hope for the best. We shall promote friendly relations with other nations and be mindful of their rights. We shall endeavor to protect and defend our national integrity and independence to the limit of our means. We know not what the future has in store for us, but we have faith in a just God who presides over the destinies of nations, and who alone holds our fate. [Applause.] We cannot falter in the attainment of our long-cherished Ideal. We must secure a place, however modest, in the concert of free nations. [Applause.]

Manuel Luis Quezon


text: Dictionary of National Biography, 1885-1900/Hooper, William Hulme

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text: Dictionary of National Biography, 1885-1900/Hooten, Elizabeth


text:
Manuel L. Quezon's Fourth State of the Nation Address

Gentlemen of the National Assembly:

I take pleasure in congratulating you upon your election to this Second National Assembly, and to you, Mr. Speaker, I wish publicly to express my deep feeling of satisfaction that your distinguished colleagues have elevated you to this position of great responsibility and honor.

As we enter upon the second and last period of my administration, we should once more make public avowal of our objectives and of our firm determination to achieve them.

The Philippines is our country, and we shall make it the home of a free people—not alone politically, but economically as well. And this economic freedom must not be limited to the concept of national self-sufficiency, but must extend to every hamlet and hearth in this land. For of what practical value can the “right to life, liberty and the pursuit of happiness” be to a person, if he does not actually enjoy it and his only freedom consists in the freedom to starve or die?

This then is our ultimate goal: That the political rights vouchsafed to all our people by the Constitution be made real and effective by affording to every person willing to work the opportunity to earn a decent livelihood.

The First National Assembly laid the foundations for the attainment of this goal. It made an enviable record worthy of emulation. Only a visionary could claim that this task can reach fruition during the life of one administration or of even a generation. We have to rebuild our national structure on the solid and permanent foundation of social justice. Laws alone will not do it. We have to fight against prejudices, wrong notions, and outworn customs and traditions. We have to preach the fundamental principles of Christianity, and make them the underlying philosophy of our political and social institutions.

The great work initiated by the First National Assembly with such signal success we have to continue and carry forward. This is the mandate we have received from our people and which we dare not disobey.

No party has ever received such a vote of confidence as the Nationalist Party did at the last general election. Not a single candidate from the minority parties has been elected to this body. The faith and trust which our people have placed in our party in this extraordinary manner demands, in turn, from each of us extreme fidelity and devotion to duty. Not only must we steadfastly forge ahead with our determination to elevate to the topmost the moral, cultural, political, economic, and social conditions of our people, that they may be free from every sort of bondage, but our official acts and deeds should be such as to convince our people of the earnestness and honesty of our aims.

As the head of the State and the leader of our party, I venture to express the hope that the National Assembly will resist every temptation to divide itself into groups or blocs that may tend to weaken our unity of purpose and action. One of the dangers of such division lies in the possibility that the general interests of the nation may be overlooked, at least temporarily, and sacrificed for the benefit of the particular interests represented in the group or bloc. Obviously, one of the reasons why our people did not elect to the Assembly members representing the opposition is because they realize the importance of avoiding waste of time in political bickering in the proceedings of this body in these anxious days when every single energy we can command should be devoted to the difficult task of preparing our nation for an independent existence in an international situation so fraught with danger. Moreover, organized groups or blocs within a party are inconsistent with party responsibility and majority rule.

Gentlemen of the National Assembly, with your permission, I shall now proceed to give you a report on the state of the nation and to submit my recommendations regarding measures of first importance which I consider deserving of your prompt attention. From time to time, I shall take the liberty of sending to this body other messages concerning matters which, in my opinion, should be acted upon at this session.

During the past year the country enjoyed peace and order. There have been conflicts between capital and labor, but without serious consequences. Both the Department of Labor and the Court of Industrial Relations are entitled to commendation for the happy solution of such conflicts. However, we would be closing our eyes to the realities of the situation were we to believe that labor in our country is satisfied with its lot. There is growing unrest and discontent, specially among the farm laborers, not due entirely to the activities of professional agitators and irresponsible so-called labor leaders. Our laborers cannot be easily led astray by agitators when they have no real grievances. The Government is deeply concerned with the well-being of our masses, and it will not cease in its efforts to better their condition until ample justice is secured to them.

New public schools and classes have been opened and the enrollment in the public schools last year was increased by over 243,000. Approximately 18,500 kilometers of roads were in existence at the end of the year, and new wharves and other port facilities have been constructed. Public hospitals have been increased or enlarged, and clinics and dispensaries have been established in many localities. We are making progress in providing the remotest sections of the country with the services of doctors, dentists and nurses, and it is my earnest hope that during the next three years every town will be provided with these services. Sanitary conditions have been improved. We have not had any serious outbreak of epidemics and every threat or danger was effectively checked. An important housing project has been started in the vicinity of Manila to permit wage-earners and low-salaried employees to acquire or build their own homes. Should this project be successful, as I hope it will be, similar projects will be initiated in other communities.

Generally speaking, our national defense program has been carried out as planned, both as to cost and the number of men trained. Two full classes of trainees have now been processed through the instructional cadres and their organization into effective military unit’s proceeds apace. Acquisition of arms, equipment and supplies is in approximate step with the production of tactical units. The Air Corps is steadily evolving into an effective fighting unit, both as to personnel and to equipment.

Deserving of special mention is the Philippine Military Academy in Baguio and its progress toward the establishment of a training course calculated to produce a highly trained, loyal and efficient professional leadership for our Army.

One accomplishment of the year toward which effort had been long directed was the separation of the Constabulary from the Army. From the beginning it was realized that law enforcement is not properly a military responsibility. Yet the necessity for using the Constabulary, as it existed in 1935, as the nucleus out of which to establish the Army’s foundation, and the paucity of trained men for key positions had been the causes of the temporary consolidation heretofore existing. In the hope of avoiding wholesale transfers from the Army for police work, the establishment of a State Police from civilian sources was attempted in 1936. When the lack of trained personnel demonstrated that this method could succeed only if large numbers of officers and enlisted men were made available, it was decided, to avoid administrative complications, to separate from the Army the necessary individuals and organize them into a Constabulary. This has been done, and there is every reason to believe that the reconstituted organization will quickly earn a popular respect and prestige equal, and even superior, to the reputation in this regard enjoyed by the organization that existed prior to the establishment of the Commonwealth.

As a final word respecting the Army, I want to urge you, once again, to give to all matters concerning our future security the earnest consideration their fundamental importance deserves. If eternal vigilance is the price of freedom, let us then be ceaselessly vigilant. Our defensive system requires no unusual sacrifice by any individual, but its success depends primarily and almost exclusively upon a unification of the efforts of all toward this common and vital purpose. To attain such unification in a democracy, the military plan must be supported by popular intelligence, confidence, and enthusiasm. It is a special function of Government to see that this confidence is fairly earned and assiduously sustained. To this end let us see to it that every law we pass and every military measure we adopt shall reflect an unselfish and national purpose, that it shall impose injustice on none, and that it shall promote the security and defend the peace, the possessions and the liberty of all.

The business enterprises of the Government, especially the Philippine National Bank and the Cebu Portland Cement Company, were operated at a profit during the past year. The Manila Railroad Company has at long last completed its southern line. The gap which existed for many years between Tayabas and Camarines Sur was connected at a cost of about P2,000,000. This was one of my dreams that have come true. The significance of this achievement will be readily seen when we consider the fact that a daily, comfortable, fast and inexpensive communication service has been established between Manila and the Bicol provinces. At the same time the completion of this southern line means increased earnings for the railroad. The National Rice and Corn Corporation stabilized palay and rice prices at levels which, under the circumstances, properly safeguarded the interests of consumers and producers alike. The National Development Company is completing the construction of certain factories and studying the organization of others, in line with our policy to promote industrial development and provide more opportunities for the employment of labor. It is our policy with regard to many of these new industries merely to do pioneering work and ultimately to transfer them to private ownership and management.

Our foreign trade during 1938 suffered a slight reduction, mainly on account of low prices for our export products. It is to be noted, moreover, that our imports increased materially, while our exports decreased in value resulting in larger imports than exports decreased in value, resulting in larger imports than exports. This is an unhealthy condition for a country like the Philippines and every step should be taken to guard against the persistence of this adverse balance of trade. This situation may be due in part to increased purchasing power as a result of the expenditure by the Philippine Government of proceeds of the excise taxes on Philippine products collected in the United States. At the beginning, these remittances were made through the Dollar Exchange Standard Fund which resulted in an increase of circulation. In order to avoid this undesirable effect, the necessary measures have been adopted to effect the transfer of these funds through normal bank exchange transactions, without the necessity of releasing new currency by the National Treasury.

Tax receipts exceeded budget estimates during the last year. The income from taxation, however, for the year 1938 was P8,076,362.49 below the collections for the year 1937, exclusive of the proceeds of the excise taxes from the United States. This reduction in revenue may be attributed to three causes: (1) the low prices for our agricultural products both for domestic consumption and for export, (2) the stock market slump during the year 1938, and (3) the fact that in 1937 large amounts were collected for taxes due in preceding years. Despite the reduction in the public revenues the fiscal position of the Government remains sound and strong. As the budget which I shall present to the National Assembly will reveal, the expenditures of the Government during the year 1938 were well within the income for that year, with an excess in collections accruing to the general fund over the ordinary expenditures amounting to P12,410,420.21 at the close of the year.

The low prices for our export crops during the past year were a serious blow to a large portion of our population. This emphasizes the necessity that we should endeavor to establish our economy in an ever-growing proportion on the basis of our home market, because export crops must face conditions which are beyond the control of our Government.

As I have already reported to the last National Assembly, the President of the United States, in consultation with me, appointed the Joint Preparatory Committee on Philippine Affairs to study and make recommendations concerning future trade relations between the United States and the Philippines. The Committee has submitted its report and recommendations to the President of the United States and to the President of the Philippines. Copies of this report were furnished to the members of this body. The report will be officially transmitted to the Assembly tomorrow. I commend it to your careful and earnest consideration. President Roosevelt and I have both approved the report and recommendations of the said Committee and it is my understanding that the President will urge the Congress to enact appropriate legislation to carry into effect those recommendations. One of these recommendations is to do away with the restrictions on the expenditure of the proceeds of the excise tax on coconut oil, and another is to bind copra and abaca free of United States duty during the Commonwealth period. While it is not necessary for the National Assembly to pass any legislation effectuating such recommendations until the Congress of the United States has acted thereon, I earnestly recommend that you approve a resolution endorsing the recommendations of the report, so that the Congress of the United States may be informed that, if it should take favorable action on said recommendations, the National Assembly would do likewise. It is my hope that the Congress of the United States will approve legislation putting into effect the recommendations of the report at an early date, in order to place American-Philippine trade relations on a more fair and equitable basis, and to permit the Philippines properly and intelligently to plan its economic adjustment in preparation for independence.

In connection with this matter, I have sent as my special representative to Washington the Honorable Sergio Osmeña. Vice-President of the Philippines, to conduct, with the cooperation of the Resident Commissioner, the necessary negotiations with the Government of the United States. With the authority, they have enlisted the assistance of the Honorable Antonio de las Alas, formerly Secretary of Finance. I am in constant touch with the Vice-President who is keeping me advised of the progress of their work. So difficult and delicate a task could not have been entrusted to better hands.

Yielding to the wishes of the members of the last National Assembly and of the business community, I agreed to defer action upon my proposals for a tax revision and appointed a Tax Commission to study the matter. The Tax Commission has effected a revision of our internal taxation, taking into consideration the fiscal adequacy of our system of public revenue, a more fair and just allocation of the tax burden, and the need of insuring a more equitable and sound redistribution of wealth. I also instructed the Commission to revise the tax system of our local governments with a view to supplying them with definite sources of revenue and a sufficient income to meet their growing needs. The report of the Tax Commission will be transmitted to you at an early date and I trust that it will receive your favorable attention.

I also desire to submit to your consideration the enactment of necessary legislation for the settlement of sparsely populated regions of the Philippines, specially in Mindanao. This is important not only for obvious political reasons and as a means to promote economic development, but also to relieve the acute congestion of population existing in certain agrarian areas. The National Economic Council has recommended a carefully prepared plan to carry out this objective. The plan contemplates a ten-year program aiming at the settlement in these vacant areas of about 500,000 people on selected lands adapted to subsistence farming and the production of certain money crops. This project will require an estimated total outlay of P20,000,000 which may be appropriated from the proceeds of the excise taxes. The report and recommendations of the National Economic Council on this matter will be transmitted to the National Assembly within a few days.

Another problem which demands immediate attention concerns banking and credit, the cost of credit, and credit facilities for commerce, agriculture, and industry. The only institution in the Philippines that grants agricultural credit is the Philippine National Bank, but the limit fixed by law on the amount of the capital and resources of the Bank which may be invested in such credits has already been reached and the Bank is unable to give any more agricultural loans. Credit for capital investment is not available. There is practically no market for industrial bonds. Prevailing rates of interest charged by banks and private money lenders are still high, which fact is a drag upon economic enterprise and business prosperity. The National Economic Council is recommending a reform of our banking structure in order to remedy these evils. The Council proposes the creation of an investment bank for agriculture and industry, to which shall be transferred all the activities of the Philippine National Bank except those exclusively pertaining to commercial banking. The Council also recommends the establishment of a reserve and rediscount institution which will operate precisely in the same manner as the Federal Reserve System in the United States. This will provide a reasonable degree of elasticity and control over the money market and should immediately result in releasing for investment many millions of idle cash now prudently held by the banks as reserves in excess of legal requirements. These proposals will not only insure sufficient credit facilities at reasonable cost, but will, in my opinion, afford credit to small farmers, either directly or through cooperatives, and likewise to large industrial enterprises. Upon the approval of these measures, the Assembly may also consider the wisdom of amending the Usury Law by reducing the maximum rates of interest that can be charged. Considering the importance of credit as an aid to economic enterprise, I request that these proposals, which will be transmitted to you shortly, be given early consideration.

One of the most pressing needs of the Philippines is develop men with the necessary technological training to supply the needs of modern industry and agriculture. There is likewise great need for men who may assume positions of responsibility in the management of business and industry. I believe that the institution which should be principally expected to supply these men is the University of the Philippines. Hence, I have urged the authorities of the University to propose plans for a reorganization of that institution with a view to raising its standards and placing it on the same level with the best institutions of its kind in the world. Pursuant to my request, the Board of Regents has been studying a plan of reforms in that institution and has employed two of the most competent educators of the United States to act as its advisers in that important task. One of the recommendations of the Board of Regents has been studying a plan of reforms in that institution and has employed two of the most competent educators of the United States to act as its advisers in that important task. One of the recommendations of the Board of Regents is the transfer of the University of the Philippines to a new site. This is considered essential in order that University students may be brought under a more strict and wholesome supervision and control, and the proper spirit and atmosphere may be created on the University campus. Moreover, the physical plant of the University must be enlarged and improved, and suitable laboratories provided, if it is to be enabled to grant adequate professional training, specially in science, demanded by present-day progress. Besides being inconveniently located, the actual site of the University is too small to permit of these improvements. The transfer of the College of Medicine will require the construction of a modern hospital on the new site. At any rate, the Philippine General Hospital is no longer adequate to supply the needs of the growing population of Manila, particularly for free patients, and a new hospital is instantly necessary. This transfer of the University will require a considerable outlay, but I believe that the expenditure will be more than justified if we succeed in our efforts to capacitate that institution to supply the Commonwealth with properly trained professional men, business executives, economists, and scientists. Once reorganized and its standards raised, the University of the Philippines would set a mark for private universities to emulate. Fortunately, the present physical plant of the University will not be wasted. The Government is in dire need of buildings to house several offices and the present buildings of the University can be made adequate for that purpose. It would be highly desirable for the National Assembly to act upon the proposed transfer of the University of the Philippines at this session, so that the Government may consider the availability of the buildings of the University in framing its program of construction for government offices.

Heretofore, the municipal and city governments have had, by law, the responsibility of maintaining all elementary instruction. But in order that the purpose of the Constitution may be accomplished, it has been necessary for the National Government to assume the burden of supporting the primary schools, leaving to the local governments only the maintenance of intermediate instruction. As regards secondary instruction, I recommend that provincial governments be authorized to spend their funds only for vocational high schools and not for academic high schools, which, beginning with the school year 1940-1941, should be maintained on a self-supporting basis. Vocational high schools, however, should continue to receive adequate national aid.

To properly cope with the problem of public health and sanitation, I desire to recommend the establishment of a Department of Public Health. This is necessary for a more effective coordination of public health administration, the better to insure the protection and care of the health of our people, particularly those in early age. Furthermore, it is desirable that the Department of Public Instruction be placed in a position to devote itself exclusively to the far-reaching problems of education and to give greater impetus to the up building of the character and physique of our youth. The new Department of Public Health should be given administrative supervision over public sanitation, hospitals, asylums, clinics, dispensaries, and other institutions that minister to the health of the people.

In order to effect an orderly and scientific development of our agriculture and to permit the intelligent planning of agricultural production, it is essential that as soon as possible we undertake an agronomical survey of the Philippines. The Department of Agriculture and Commerce has completed the soil survey of several provinces. This work should be supplemented and accelerated. This agronomical survey has been recommended by the National Economic Council and the Joint Preparatory Committee on Philippine Affairs. I request that sufficient funds be appropriated to carry out this survey, which should indicate to the Government and to the people the crops adapted to different sections of the country.

Another recommendation of the Joint Preparatory Committee on Philippine Affairs is the establishment of agricultural experiment and extension stations. This is a project which should merit our immediate consideration, if we wish to stimulate agricultural enterprises and modernize agricultural methods. I recommend the repeal of the present law requiring a 5 per cent contribution by provinces and municipalities to the local agricultural fund. Better results could be obtained by a consolidation of these experiment and extension stations in typical areas than by dispersing them, as at present, and often duplicating the experiments, in each province. I recommend an appropriation from the proceeds of the excise taxes of a sufficient amount to cover the expenses for the establishment and operation of these situations in such localities as may be determined by the Department of Agriculture and Commerce. Another reason which induces me to make this recommendation is the fact that the finances of local governments are inadequate to support this service and that they cannot continue setting aside such a large portion of their revenues for these stations without jeopardizing other activities imperatively needed by local communities.

Modern industry and agriculture can not be efficiently operated without the aid of scientific research. This is particularly true in the Philippines where technological science of common knowledge is so far behind other countries. We have secured the advice of a renowned scientist to assist the Government in the establishment of an institution for scientific research. It should serve not only the Government but also private industry and agriculture. I shall submit to the National Assembly appropriate recommendations on this subject as soon as the studies of the National Economic Council and the Department of Agriculture and Commerce are completed.

The National Economic Council has recommended the establishment of an Institute of Nutrition. In order to protect the health and build up the physique of our masses such an institution is necessary. The people need to be educated on the nutritive value of different food products. There are many wholesome and nutritious articles that are consumed in some sections of the country which are unknown in others. It is also necessary t formulate dietary programs scientifically balanced which shall be within the reach of the people of the most modest means. Once the Institute completes its study of the different food products that could be produced abundantly and cheaply in the Philippines, the Department of Agriculture and Commerce could conduct a campaign for the production of national interests, has agreed with our Government that political refugees who desire to come to the Philippines shall not be given visas by American consuls without the previous approval of our Government. We owe it largely to His Excellency, the United States High Commissioner, that the State Department was fully appraised of the situation and that this administrative policy was adopted.

At the last session of the First National Assembly I had occasion to express publicly our indebtedness to High Commissioner McNutt for his unstinted cooperation with our Government. I reiterate those sentiments now. It is, therefore, with a sense of great loss for our people and for me that I have heard of his contemplated return to the United States. If he should find it necessary to resign his present post, we would be deprived of a true friend and a most able collaborator, one whom we need at this most critical period and who would be very hard to replace. But if he must leave us, we wish him to know that he takes with him our affection and gratitude, and our prayer that he may succeed in his future undertakings.

To protect the interests of our people and to repair an injustice done to certain races by existing legislation, we should enact a new immigration law. Under our present immigration law passed by the Congress of the United States, Chinese, Indians, and some other Orientals may not be admitted into the Philippines. Ours is an oriental country, and we are an oriental people. We belong to the same racial stock as some of those excluded by our laws. So long as other foreigners are allowed to immigrate to the Philippines, we should admit, under the same terms and conditions, those coming from oriental countries. To avoid, however, a large influx of immigrants from any one country, we should establish a quota that will be the same for all countries.

Gentlemen of the National Assembly, the world in which we live today is an entirely different world from that which we knew only a few years ago. Whereas before the World War, democracy was gaining ground everywhere, mankind is now divided into two great camps—those who believe in democracy and those who feel contempt for it as a completely discredited system of government. By our political education, by our convictions and by our inclinations, we are a democracy. We have established a democratic system of government and the perpetuation of this system will depend upon our ability to convince our people that democracy can be freed from those vices which have destroyed it in some countries, and that it can be made as efficient as any other system of government known to man. It behooves us; therefore, to prove that through a wise use of democratic processes, the welfare and the safety of the people can be promoted, thus contributing our share to the preservation of democracy in the world.

Manuel Luis Quezon


text: Dictionary of National Biography, 1885-1900/Hooton, Charles


text: Page:The Negroes at Port Royal - Report of the Government Agent.pdf/1


text: Dictionary of National Biography, 1885-1900/Hope, Alexander (1769-1837)


text: Dictionary of National Biography, 1885-1900/Hope, Alexander James Beresford


text:
Manuel L. Quezon's Third State of the Nation Address

Gentlemen of the National Assembly: The state of the nation remains practically the same as reported in my annual message to your Honorable Body at the beginning of your last regular session on the 16th of October, 1937.

We are earnestly concerned with social justice. Without a strict application of social justice to all elements of the community, general satisfaction of the people with their government is impossible to achieve. Here, in the just and equitable solution of social problems, is the real test of the sufficiency of democracy to meet present-day conditions of society.

Social justice involves many and varied questions, such as taxation, wages, land ownership, insurance against accidents and old age, etc.

I desire to direct your attention at this time to one subject only—taxation—which we are solemnly committed to revise in order to place the burden upon those who should and can best carry it.

Taxation is imposed in the interest of the nation: to keep peace and maintain order; to repel invasion; to prove the living conditions of the people; to educate them; to promote agriculture, industry and trade.

The power to tax may also be used to prevent the accumulation of vast wealth in a few hands. This is not to deny the right of property of the individual, but it is to affirm that this right may be limited by the State when social well-being demands it. The root of the worldwide discontent among peoples, which gave birth to communism in Russia and which has been at the bottom of every revolution of the last forty years, has been the utter disregard by governments of the social purpose of property. Selfish interests have been allowed to dictate government policies affecting social and economic life.

In the past, taxation has not been concerned with principles of justice and rarely has it been concerned with bettering the people. Rather it has sought only to produce revenues and to place the burdens on the backs of those least able to remonstrate. It has done this by taxes on consumption, on sales, on licenses to engage in business, trade or profession, and by excessive charges on services which should be rendered by the Government and for which only a sufficient charge should be made to cover the cost. Those who rule have not paid their share. They have exempted the wealth they owned and the incomes they enjoyed almost wholly from taxation. This has been true throughout the world. It has been true of the Philippines as well.

Our tax system, unlike our political system, is still a heritage of earlier centuries, out of harmony with those principles which should guide progressive nations today. The Filipino people have one of the most progressive constitutions in the world. That Constitution is built not only on the principle of political equality but also on the added principle of social justice.

It remains for us to parallel our achievement in the realm of political science by a similar achievement in the realm of economic and social justice.

The present system of taxation in the Philippines is a source of the greatest injustice from which our people suffer. It may properly be said that our burdens of taxation rest most heavily upon the masses, and very lightly upon the rich. Bearing in mind the income of the rich as compared to the earnings of the labouring class, it is a fact that the richer the taxpayer the less he contributes proportionately to the maintenance of the Government. The picture of the distribution of taxes in the Philippines is this: The wage earner and the small farmer as a class carry most of the burden, then comes the middle class, and lastly the upper class. This wealthy upper class constitutes a very small percentage of our population.

In your last session you have done away with the one direct tax which was imposed upon the poor in the same amount as upon the rich— the cedula tax. But even after the elimination of this odious tax which accrued exclusively to the provincial and municipal governments, it is still true that as far as the National Government is concerned, its income comes mostly from customs duties, the tax is ultimately paid by the consumer, and in the case of internal revenue taxes, with very few exceptions, the bulk of the tax is also paid by the consumer. Needless to say, if most of these taxes are paid by the consumer, it is the great mass of the people who are carrying the burden.

The extent to which the Commonwealth is supported by the great mass of the people through taxes on consumption is not generally realized. Taxes on consumption are of necessity taken almost entirely from the poor. These taxes are added to costs as are all other elements of the cost. Thus, in 1936 the total revenue of the National Government, including the customs, amounted to approximately P85,000,000. Of this sum less than P5,000,000 came from direct taxes on incomes while the total taxes paid by inheritances and wealth amounted to less than P1,000,000. Deducting incidental revenues and other earnings, there remained P52,500,000 in the form of indirect consumption taxes on the things the people used, and for the most part had to use. They were in the form of customs taxes, excise taxes, license taxes, sales taxes, and similar charges.

The revenues of the provinces and municipalities, excluding contributions from the National Government, amounted to P46,000,000. Except for such taxes on real estate as are ultimately borne by the owners of the real estate, the great bulk of these taxes were consumption taxes or charges on the living costs of the people.

In other words, approximately P100,000,000 have been taken from fifteen million people not according to their ability to pay but according to their need to exist. This burden is equivalent to possibly P40 per family. And this burden is borne by millions of our people whose total family income is between P100 and P200 a year. There is no escape from the fact that the Commonwealth is supported in large part by those who are already on a low margin of subsistence.

In forty years’ time we have taken from these classes a sum which approximates the accumulated wealth of the entire Philippines, agricultural as well as industrial. Within the past generation these consumption taxes have rebuilt the Commonwealth. They gave us our docks and harbours, our streets and highways, our schools and public buildings. The taxes from the poor have in fact made possible the Commonwealth which we now enjoy. It is their contributions that have given us security. They have paid for our courts of justice. They have preserved our health. They are maintaining our military establishments. They have made the Philippines a safe and comfortable place in which to dwell. It is the centavos of the millions that have created the conditions which have made our industries possible. Almost alone the masses have built the Commonwealth by their sacrifices. This has been going on for more than three hundred years. It is a system which we inherited from Old Europe, in which a few enjoyed all the privileges while the people did the work and also paid for the support of the state.

It is not social justice alone, it is ordinary justice that demands correction of this age-long injustice.

While in the case of the customs duties, we are not free at this time to introduce radical or even any important change in our laws, we are not placed in the same position with reference to the internal-revenue taxes. We must proceed at once to reduce and, whenever possible, to eliminate altogether, every internal-revenue tax which is passed on ultimately to the consumer, such for instance as the sales tax. The sales tax is not paid by the merchant but by the public who buys the articles for its consumption. The merchants, in paying the sales tax of 11 per cent for every sale that they make, no matter how many times, are only acting as collectors for the Government, and the real person who pays the tax is the last purchaser, the consumer. The sales tax, moreover, is not only unjust to the poor; it also is injurious to the healthy growth of business. There are historian-economists who attribute the ruin of Spanish industries in the sixteenth century to the sales tax. In the United States, the Federal Government imposes no sales tax, and only a certain number of States impose it. But regardless of how other governments secure their revenues, it remains true nevertheless that the sales tax is unfair to the poor and harmful to the business. I, therefore, recommend the amendment of the sales tax law so as to eliminate completely the sales tax on every article that is of prime necessity and leave it only for luxuries, in which case, the tax should be materially increased. However, in no case should the sales tax be cumulative, but rather it should be paid only once at the source.

Another advantage to the Government in the amendment of the sales tax law as suggested is that there can be no evasion of the payment of the tax as in the past. Nor will there be any need for a large number of internal-revenue collectors and inspectors who, in the performance of their duties, are unavoidably causing annoyance and irritation especially among the small merchants. Many small merchants, insufficiently trained to handle complicated accounts, waste time and energy in keeping their sales books in order. I am sure that the relief which thousands and thousands of small merchants all over the Philippines will receive from the abolition of the cumulative sales tax and of any tax on articles of prime necessity, will in itself compensate, in terms of satisfaction with their Government, for the loss, if any, that the treasury may suffer. I believe, too, that it is in part due to the difficulties that the average small Filipino merchant finds in keeping his books and paying his books and paying his sales tax that the retail trade is not largely in Filipino hands. It is my hope and belief that the abolition of the sales tax will encourage and facilitate the entry of more Filipinos with little capital into the retail business.

There are other internal-revenue taxes that should be abolished or amended, such for instance as the license fees on the various professions. It is evidently unfair that a new lawyer or anew doctor should be made to pay the same amount of license as those most experienced and accredited in the profession they are paying. If it is the preference to keep this tax, at least there should be an exemption for those who have not been in the profession more than five years. In order that the Government may have a record of these practicing professionals, they may be compelled to pay only what is necessary to defray the cost of keeping that record.

There are still other taxes on our cultural life that should be repealed or very materially reduced. One of these is the tax on radio sets which should not exceed P1 a year, except in the case of expensive sets which are luxuries. The radio should be available to every family. It is a means of political contact with their Government. It is a carrier of news, by which the people may be informed as to what is going on in the world. Through the radio adult education is possible. Through it, music and drama can be disseminated in every barrio. By means of the radio, police administration is made easier, and property and life made more secure. To tax such an instrument by an almost prohibitive charge to the poor is as indefensible as a prohibitive tax on the daily press.

In the case of the market licenses, I recommend that the National Assembly enact a law prohibiting the municipalities from collecting market and slaughterhouse fees in excess of what is necessary to pay for their maintenance and upkeep. If, however, the municipality is still in debt for the construction of its market, it may be permitted, if deemed necessary, to collect higher taxes only until such cost has been fully recovered.

The foregoing recommendations will mean a serious reduction in the income of the Government which we cannot afford to leave uncovered. Fortunately, there are many sources from which we can raise new taxes without causing any injustice to those who will have to pay, for we must see to it that these new taxes are just and fair, that they do not discourage initiative in sound business enterprises. Indeed, my very recommendation that the sales tax and licenses be done away with is in line with our purpose not to allow taxation to retard the proper economic development of the country nor to jeopardize the confidence of business in us.

In your first regular session, you passed an act increasing the rates of our income tax, but the most cursory examination of the income tax paid in the Philippines both by corporations and individuals as compared with the income tax paid in other countries shows that we are practically imposing a nominal income tax. The United States is not the country that imposes the highest income tax, yet as compared with America, the income tax in the Philippines is but a trifle. Following is a comparative statement of the rates of income tax levied in the United States and in the Philippines.

It should be borne in mind that besides the income tax which corporations and individuals in the United States pay to their Federal Government, they still have to pay income tax to their respective States. In the Philippines, however, the income tax is paid only to the National Government.

I advise against raising the income tax in the Philippines to anything near what is being collected in the United States. We are in the formative period of our national economy and we should not discourage the investment of capital. But we must increase the income tax because it is inexcusably low. Moreover, this is the time to adopt the policy of avoiding the accumulation of enormous wealth in a few hands and to force the return of excessive income to the public through the medium of government services supported by these taxes. It is in the case of corporations. Inheritance and income taxes that the Government must bear in mind the need of reverting to the nation large amounts of wealth that may be accumulated in a few hands. From the increase collections accruing to the National Government from the additional income tax that we contemplate imposing, an adequate proportion should be set aside for the provincial and municipal governments.

It is my firm belief that if the recommendations made in this message are carried out by the National Assembly, we shall have gone far in our efforts to lay down the foundations of a nation wherein each citizen will contribute his part in the maintenance of the Government in proportion to his ability or resources. As we reduce the burden that is being unduly placed upon the masses of our people, on the one hand, and give them the wage that they are entitled to earn, on the other, we shall ultimately raise the standard of living as we reduce its cost, and thereby increase the purchasing power of the wage earner.

We are liable to forget the fact that the business of the country does not come from great incomes that a few individuals residing in that country make, but from the earning power of the masses.

I hope that this Honorable Body will enact the laws herein recommended early in this session. We have talked enough of social justice. Even the walls have heard our speeches. We have made a good start. We have raised the wages of all government labourers. We have abolished the cedula tax. But we have not done enough. We have only begun. Now we are fully prepared to act and we must act at once, if our people are to continue placing their confidence for the remedy of the social evils which embitter their life entirely in our hands. The last general elections have proven beyond question that the people have wholeheartedly and enthusiastically approved of our avowed policies. The City of Manila, which, like every large city in the world, is usually in the opposition by large majorities, has voted practically for the whole Nacionalista ticket, the election of two councillors from the opposition being purely a vote for the individual rather than for the party to which each belongs. As for the rest of the country, all the newly elected governors are Nacionalistas; only one or two provincial board members and an occasional mayor belong to the opposition.

Gentlemen of the National Assembly: The time to act is now. Deeds and not words is what our people want. We dare not disappoint them. Manuel Luis Quezon


text: Dictionary of National Biography, 1885-1900/Hope, Anne