Public Choice: The Life of Armand V. Fabella in Government and Education

By Roel Landingin

Public Choice: The Life of Armand V. Fabella in Government and Education chronicles the legacy of Armand V. Fabella as a talented, dedicated civil servant and educator who had worked with six presidents—from Ramon Magsaysay in the 1950s to Gloria Macapagal Arroyo in the 2000s—and as senior government adviser and Education secretary.

Penned by business journalist Roel Landingin, Public Choice is more than a biography of a remarkable Filipino who dedicated most of his life to public service. It is also the story of Philippine economic policy-making in the last half century.

• Language: English
• Publisher: Anvil Publishing, Inc.
• Release date: Nov 20, 2017
• ISBN: 9786214201457

Book preview

Chapter 1

BIRTH IN PARIS

LANDMARK. The original church in Pagsanjan, Rizal, birthplace of Armand’s father Vicente Fabella. The Fabellas were one of the most prominent families in the town. Armand’s grandmother Damiana was a generous benefactor of civic and religious festivities in the town.

The day Filipinos found out that strongman Ferdinand Edralin Marcos had declared martial law and seized power for himself, a truckful of heavily armed troops from the Metropolitan Command (Metrocom) of the Philippine Constabulary came to fetch Armand Vincent Fabella from his home.

It was September 23, 1972, a Saturday. Armand, then 42, and wife Marinela woke up that morning to discover that the newspaper had not been delivered at the usual time. The radio and the television had turned mute, too. Armand, there’s something wrong! No radio. No signal. No nothing, Marinela exclaimed.

If he had any inkling that something was afoot, it was because of a strange incident just the night before. At around 8 p.m. Friday, while Armand and Marinela were entertaining some guests, they heard what sounded like a burst of gunfire near their house in the Wack-Wack subdivision, the posh residential village that straddles Mandaluyong and San Juan cities in Metro Manila.

Marinela and Armand walked down Harvard Street where their house was located, toward the direction of the gunfire. At the bend they reached Notre Dame Street and found a sizeable crowd ogling at a bullet-ridden car that had crashed onto a tree. It was right in front of the house of Oscar Lopez, the scion of the wealthy and powerful family that acquired control of the country’s biggest electricity utility from its American owners the previous decade. Oscar was Armand’s contemporary in Harvard University.

We went because it was just near our house. And then we saw this car, which was parked. It had crashed into a tree. It was locked and full of bullet holes, said Marinela.

They later learned that the incident was a supposed ambush on Juan Ponce Enrile, then Marcos’s defense secretary. But Enrile escaped unhurt, sustaining neither bruise nor scratch. He was in another car.

Armand sounded skeptical that what had happened was indeed an ambush. Yet still he voiced fear that the incident was a portent of ill tidings, said Marinela. This looks like a set-up. How can it (car) be under lock and key if this was a real ambush? she recalled Armand saying. This is the secretary of defense. It’s impossible for the president not react to this. So, we thought, let’s see what’s going to happen next.

As it turned out, Marcos was to inveigh the supposed ambush as one of the pretexts for why he has to issue Proclamation No. 1081 on the night of September 22, placing the entire Philippines under martial law. In quick succession that same evening, Marcos ordered the arrest and detention in military jails of hundreds of activists, journalists, and opposition leaders, including his archrival, Senator Benigno Ninoy Aquino, Jr.

After breakfast the next day, the Metrocom soldiers arrived. According to Marinela, the team leader told Armand: President Marcos wants you to come with us to Malacañan.

Armand quickly changed into his usual office wear, kissed Marinela good-bye, and left with the soldiers. Okay, I’ll see you later, was all he said to her.

Reports about so many prominent persons being picked up by the military flew thick and fast. Fear gripped Marinela. She worried that Armand may have also been arrested and could be headed for detention, instead of for Malacañan Palace, the official presidential residence. Frantic and in tears, she called her mother, former Senator Maria Kalaw Katigbak, a close friend of the Marcoses, to help her find Armand.

I was telling my mother, ‘Armand had been picked up! Why was he picked up when he is working in government? I was really scared. Ninoy and others had already been picked up. I was so scared. And my mother was also scared. Nobody knew what was happening, recalled Marinela.

Her worries waned only when she found out hours later that Armand indeed was at the presidential palace, along with scores of other government officials. When Armand came home late that evening, Marinela pressed him about what happened in Malacañan. Nothing, he said. They were all there and they were making all these executive orders. We got to draft an order. After that, I just stayed on one side.

There was something about the perilous and uncertain times that fateful September day in 1972 that led Marinela and her mother to fret that Armand may have been picked up by the military. At the time, he was chairman of the Commission on Government Reorganization and co-chairman of the International Monetary Fund-Central Bank of the Philippines Bank Survey Commission.

The incident illustrated, too, Armand’s maverick and irreverent ways. He had a habit of blurting out what was on his mind, for telling things like they were, and his friends worried that this would one-day land him in trouble. Indeed, when he noticed there was no radio or television broadcast that fateful Saturday, Marinela remembered Armand saying out loud: That SOB. He called martial law! It was not the first and only time that Armand affixed the appellation to Marcos, albeit always in jest and only in the company of family and close friends.

But far from landing him in jail or worse fate, the Metrocom’s visit to the Fabellas’s abode signaled a high point in Armand’s work on government reorganization. By then, for six months already, Congress had ignored proposals of the Commission on Government Reorganization for a comprehensive plan to simplify and rationalize government. That fateful day in Malacañan, Armand was asked to help draft the first of Marcos’s many martial-law decrees—Presidential Decree (PD) No. 1, which adopted almost en toto the proposed Integrated Reorganization Plan that Armand and the Presidential Reorganization Commission had been working on for two years.

PD No. 1, which Marcos signed on September 24, 1972, paved the way for the overhaul of the entire national government bureaucracy. It merged several agencies to simplify the organizational structure, created a new and stronger central economic planning organization, and introduced regional offices to bridge the wide gap between national agencies headquartered in Manila and local government units at the province and municipal levels. The form and function of national government departments would never be the same again with the implementation of the Integrated Reorganization Plan.

The plan was just one of Armand’s many accomplishments in the course of over half a century’s work in and out of government since the mid-1950s, under six Philippine presidents.

Armand started as an economist for an independent commission organized by the late President Ramon Magsaysay to study the fledgling central bank in 1955 and served as deputy executive secretary for economic affairs of President Diosdado Macapagal in the 1960s; spearheaded efforts to reorganize the government and to reform the banking system under President Ferdinand Marcos in the 1970s; helped the revolutionary government of President Corazon Aquino draft a workable privatization plan and negotiate badly needed loans with the World Bank in the mid-1980s; headed the Department of Education, Culture, and Sports under President Fidel Ramos in the early 1990s; and guided the rehabilitation of a troubled government bank as chairman of the United Coconut Planters Bank under President Gloria Macapagal-Arrroyo in the mid-2000s.

He also worked as a consultant of the Asian Development Bank and the World Bank to lay the ground for the introduction of market-based systems in the hitherto centrally planned economies of Laos, Myanmar, and Mongolia.

Through it all, Armand also oversaw the growth of the Jose Rizal College—that his father had founded—into one of the country’s most respected tertiary educational institutions. Too, he helped establish and nurture a retirement fund for private school teachers and employees into a viable and profitable financial organization that helps make life more comfortable for its members.

Yet unlike architects or engineers who could point to concrete structures as testimonies to their life’s work, Armand’s legacy was not built on stone and steel alone, except perhaps for several buildings at the JRU campus that were built while he was president or chairman.

Still, the impact of key government policies he proposed and crafted during his long and varied career in government endures to this day. The current government structure continues to reflect the basic features of the reorganization plan that he helped write in the early 1970s. The creation of a professional corps of government managers along the lines of the officer corps of the uniformed services and the diplomatic corps traces its origins to that era.

Armand’s work on banking reforms paved the way for the lifting of post-war caps on interest rates, which triggered a surge in bank loans in the 1970s and the proliferation of a wider variety of loan products. He helped usher in the rise of universal banks, or expanded commercial banks as he called them, by adapting proposals advanced by the World Bank for reforming the banking system to domestic conditions. Universal banks eventually helped create a more stable financial system, one reason why widespread bank failures have become less frequent since the 1990s.

As well, his work on tax reforms led to the shift from global to scheduler taxation, which subjected to final taxes earnings from bank deposits, dividends or capital gains so these need not be included in income tax returns.

THE MAN destined to reshape and reconfigure the national government in the Philippines was not born in Manila or in any of the archipelago’s 7,100 islands. In his own words, Armand said he came into this world in a seedy hotel in an interesting part of Paris, France.

In notes that he was preparing for his unwritten memoir, Armand said his birthplace was actually a toss-up between the Holy City of Rome in Italy and the naughty capital that was Paris. The Fabellas were in Nice in southern France when Armand’s expectant mother Carmen felt the pangs of his coming birth. His mother had family for company then—Armand’s father Vicente; uncle Jose, a medical doctor and the Philippine Public Welfare Commissioner in the Commonwealth government; Jose’s wife; and Armand’s elder sister Virginia, then two years old.

With her time coming ever closer, a discussion was held as to where I should be born, with two main contenders: Paris and Rome, Armand wrote. In effect, however, there was really no choice, since visas would be necessary for Italy, while (the visa for) France covered both Nice and Paris, hence no visa problem. And so, Paris it was.

The party of five made it to Paris after taking the night train from Nice. Her labor pains had begun. They settled for the nearest hotel, Hotel Helene, on the Rue de la Victoire, just behind the Boulevard Haussman.

And so on April 21, 1930, Armand V. Fabella was born, and by his own writing, in a very plush suite, decorated entirely in red velvet with large mirrors. It is not clear whether by very plush he meant that he was born in swanky or gaudy surroundings but to be sure, Armand the newborn was not wrapped in swaddling clothes.

Days later, he was baptized at the Cathedral of Notre Dame de Paris. His father invited prominent Filipinos who were in Paris at the time. Among those who came were Eduardo Endeng Cojuangco, a graduate of Jose Rizal College and one of the sons of Melecio Cojuangco, who owned vast lands in Central Luzon and Josephine Murphy, who would later marry Endeng. Five years later, Josephine gave birth to a son named Eduardo Danding Cojuangco, Jr., who became a close associate of Ferdinand Marcos and one of the country’s most well known and controversial businessmen and political players. It seems that Danding would have never been were it not for me, Armand surmised in his notes.

Where somebody was born may or may not have anything to do with somebody’s temperament but Paris’s joie de vivre had seemingly marked Armand from birth. By many accounts, his penchant for joy and laughter was immeasurable, even incorrigible. One could only wonder how he would have turned out if his parents had made it to Rome, the Catholic Church’s citadel.

The unusual circumstances of Armand’s birth yield important clues about his parents’ love for travel and adventure, a matter that would shape his future life. Going on a trip to Europe—which took several weeks on a ship—with a two-year old daughter and a pregnant wife was something that only the most adventurous travel bug would dare take.

Indeed, Vicente’s brother Jose had brought with him to Paris his wife who had also just given birth four months earlier to Erlinda Fabella, Armand’s first cousin: We were born almost at the same time. I was only four months old and I don’t know why my parents were in Paris, Erlinda recalled. I never asked my Mama why she was in Paris and left me when I was just four months old.

Armand’s sister Virginia, a girl of two when she joined the tour, said the family traveled far and wide. Early on, we were already travelers. We were really a travel-loving family, she said.

The Fabellas had been all over Europe and as far as Africa even though Virginia was too young to remember all those trips. With a laugh, she said she had no memory as a child of visiting Munich or even Paris until she saw her mother’s album of photographs from the family’s travels overseas. I was asked, ‘Have you been to Paris?’ I said, ‘No.’ It was always no. But the pictures say it all. It turns out I’ve been around a lot.

BY THE time Armand was born in 1930, his father was already a successful pioneering accountant in the Philippines. He had a well-established accounting firm that counted some of the wealthiest families in pre-war Philippines as clients.

Born May 7, 1891, Vicente is widely considered to be one of the Philippines’ first certified public accountants and the father of public accounting as a profession. Along with other pioneers of the profession, he lobbied the Philippine colonial legislature to enact the 1923 Accountancy Act, which created the Board of Accountancy to professionalize the practice of accounting in the Philippines. The law, patterned after CPA laws in the United States, required accountants to first pass a government-administered examination before they can be licensed and allowed to practice the profession.

Dr. Conrado F. Benitez, the first Filipino dean of the UP College of Liberal Arts and one of the founders of the Philippine Women’s University, acknowledged this much. He said: Don Vicente Fabella is the father—the pioneer of professional business training in the Philippines.

After high school in Laguna and Manila, Vicente studied at the newly opened University of the Philippines (UP) College of Liberal Arts where he earned a Bachelor of Arts degree in 1912, four years after the state university was established. While in UP, he also helped found the Upsilon Sigma Phi fraternity, one of the oldest and most prestigious student organizations in the state university.

He taught at the UP and later went to the US for further studies as a government pensionado or scholar. In 1915, he obtained not one but two degrees from two universities—a bachelor of philosophy from the University of Chicago and a diploma in commerce from the Northwestern University in Illinois, located not far from Chicago. Vicente also took and passed examinations given by the board of accountancy in Wisconsin in 1915, making him the first Filipino accountant to be allowed to practice in the United States.

Dr. Benitez surmised that Vicente must have studied at the University of Chicago during the day and took evening classes at Northwestern University. Amid his heavy academic load, Vicente still found time to work part-time. Armand’s sister Virginia said she recalled her father mention that he took on odd jobs, including translating the menu of a Greek restaurant into English.

When he came home from his studies in the US, Vicente taught as a professorial lecturer at UP. In 1916, the state university started to offer a two-year course leading to a degree of Bachelor of Science in Commerce, to help address the lack of business initiative and training commonly observed among Filipinos then. Demand for the country’s agriculture and resource exports was booming in Europe, in the aftermath of the First World War. Sadly, most Filipinos themselves failed to take advantage of the boom as 80 percent of commerce, both domestic and foreign, was in the hands of foreigners. The accounting course was initially offered under the Department of Economics in the College of Liberal Arts. UP established a separate School of Business in 1928. Its first dean was Conrado Benitez.

Vicente also founded an accounting firm, Vicente Fabella and Co., with other pioneers of the accounting profession in the Philippines. His roll of partners included Nicanor Reyes, founder of the Far Eastern University, Jose Fernandez, Ramon Gadiongco, Artemio Tulio, Raymundo Pangilinan, and Vicente’s brother Adolfo Fabella. When the CPA law was passed in March 1923, Vicente and his partners were among the first to be issued CPA licenses. He himself was the holder of the 9th CPA license in the Philippines, issued in July 1923, according to the Professional Regulation Commission.

In the summer of 1918, Vicente and his associates began to offer bookkeeping and accounting courses under the name of the Far Eastern College School of Accounts, Commerce, and Finance. It was formally incorporated as a non-stock, non-profit, and non-sectarian corporation in July 1920. Aside from Vicente, the incorporators and first set of directors included Jose V. Hernandez, Adolfo Fabella, Sancho Zalamea, Jr., and Monitor I. Enriquez.

An advertisement in The Manila Times newspaper published in June 1919 touted the school as the only institution of its kind in the Orient. It boasted that its faculty comprised only specialist and experts trained in the University of the Philippines and America. Apart from college courses such as accounting, commerce, finance and liberal arts, it also offered commercial high school courses such as bookkeeping, stenography, and typewriting.

Because Vicente was one of the first Filipinos to acquire formal training in the United States as an accountant, he became the school’s biggest draw and attraction. Quoting Rufino Melo, who belonged to the second batch of the school’s graduates, Francisco Calabiao, JRC professor, wrote: The Far Eastern College was a one-man affair with Fabella directing the whole set-up. Young men were attracted to the Far Eastern College, not because of the College but because of Fabella. He was the best in his time.

In 1922, the accounting school’s name was changed to Jose Rizal College in honor of the national hero from Vicente’s beloved home province of Laguna. Vicente was just a boy of five when Rizal was executed in 1896 but he had heard a lot from his parents about the extraordinary talents and patriotism of the national hero.

After its accounting courses were absorbed by the newly established Jose Rizal College, Far Eastern College continued to offer mainly offered liberal arts courses. Nicanor Reyes, another pioneer of business education in the Philippines, later acquired Far Eastern College and merged it with the Institute of Accounts, Business, and Finance, which he established in 1928, to form the Far Eastern University in 1933.

Reyes, then chairman of the University of the Philippines Department of Economics, obtained a doctorate in accountancy and a Master of Arts degree in business administration from Columbia University in New York.

From the beginning, Jose Rizal College or JRC tried to cater to working students, especially those belonging to low-income families. It conducted classes in Avenida Rizal but moved later to Sta. Cruz near Escolta, and eventually to Quiapo, then the commercial and business centers of the burgeoning metropolis. The college was run as a non-stock, non-profit corporation, which reinvested most if not all of its earnings instead of paying out dividends to the owners.

As soon as it opened, JRC became an instant hit. On the first day of enrollment, it collected a sum of P4,000 in tuition, roughly equivalent to half a million pesos in today’s money, assuming an average inflation rate of 5 percent. According to Calabiao, who wrote a brief history of the school: The College was well-publicized in the newspapers, before its opening.

Unlike the dominant private colleges at that time such as Ateneo de Manila College, De La Salle College, and the University of Santo Tomas, which were owned by Catholic religious orders, the new school that Vicente and his friends established, Jose Rizal College, was distinctly secular. The dominant schools were all Catholic. He envisioned JRC as a non-sectarian school. He was always stressing that, recalled Virginia.

She said her father was not anti-Catholic but he had bad memories of priests in his younger days in school. That was why he was quite shocked when Virginia told him she was going to enter the convent. What?! she said he blurted out, upon hearing of her plans to become a nun. He had very poor regard for priests, she said.

Despite his heavy workload at the school and his accounting firm, Vicente traveled extensively to the United States and Europe. Three years after Armand was born in Paris, Vicente attended the International Congress in Accounting in 1933 as the Philippine delegate.

VICENTE WAS the third of six children of Juan L. Fabella and Damiana C. Fernandez who came from Pagsanjan in Laguna where they owned rice and coconut lands. The eldest was Dionisio, who became treasurer of Cebu. Daughter Edith later married Emmanuel Pelaez, who became vice president to President Diosdado Macapagal from 1962 to 1965. Then came Jose, who became the commissioner of public health and social welfare under the US colonial regime and Commonwealth government led by Manuel L. Quezon. Next came Vicente, two more daughters Salud and Rosario, and a third son, Adolfo, who also became an accountant and worked with Vicente.

Pagsanjan first emerged in the historical records as a barrio of Lumban, a town founded in 1578 by the famous Franciscan friar and missionary Juan de la Plasencia. Among its first settlers were eight Christian Chinese and Japanese traders who were attracted by the village’s strategic location at the junction of two rivers. They would later establish a betel nut industry in the barrio. The place’s original name was, in fact, Pinagsangahan, which means branching or juncture. The barrio progressed steadily until Pagsanjan became a town in 1668 and Laguna’s capital in 1688, a distinction it held until 1858.

Pagsanjan natives married with other races and nationalities, according to the historian Gregorio F. Zaide, who hailed from the town and wrote a short history of the place. Predominantly Malayan in racial origin, they possess the ethnic influences of the Chinese, Indians (Hindi), Japanese, Thais, Arabs, Spanish, Mexicans, Americans, British, French, Italians, and other nationalities, Zaide wrote.

More than the residents of other towns, the people of Pagsanjan typically burn with pride of place and race. Even Zaide, an experienced historian, had ditched his cold objectivity when describing the traits of his town mates. He said the heady mix of the races in Pagsanjan’s ethnic make-up enabled it to produce men of remarkable talents and women of alluring beauty.

Known across the world for its majestic waterfalls and the thrilling shooting the rapids boat rides, Pagsanjan’s real attraction, according to Zaide, is its intelligent and cultured people, who have distinguished themselves in all realms of human enterprise—in arts and sciences, in politics and diplomacy, and in war and peace. And "because of this versatility of her people and their high culture, Pagsanjan came to be known during the Spanish period as the ‘Atena de la Provincia de Laguna’ (Athens of Laguna Province)."

Although Zaide made no effort to mask his bias for his hometown, it seems clear there is something about Pagsanjan that makes it special. The small town of just 16,000 in the mid-1970s has produced at least half a dozen prominent figures in the field of education.

Not least of them were Francisco F. Benitez, the first dean of the UP College of Education; Vicente Fabella, who established the Jose Rizal College; and Arturo Guerrero, president of Trinity College. Three of the country’s most prominent and celebrated historians also hailed from Pagsanjan—Leandro H. Fernandez, former head of the UP History Department and dean of the UP College of Liberal Arts; Conrado F. Benitez, foremost economist and founder of the UP College of Business Administration; and Gregorio Zaide, the well-known author of Philippine history textbooks.

For both their wealth and civic-mindedness, the Fabellas were distinguished citizens of Pagsanjan. Vicente’s father Juan L. Fabella, who was born in 1858 and died in 1916, was a former mayor of Pagsanjan during the Spanish and American colonial regimes. A collection of documents and letters of Emilio Aguinaldo’s revolutionary government captured by the US soldiers during the brief Philippine-American war includes a letter Juan Fabella wrote as mayor of Pagsanjan, sending 844 capsules of Remington and Mauser rifles to the revolutionary government’s military chief.

Juan’s parents were Vicente Fabella and Matea Lavadia, whose father, in turn, was Rudocindo Lavadia. On the other hand, Damiana’s parents were Macario Fernandez and Arcadia Cobarrubias. Widowed as a young woman by Macario Fernandez, Arcadia later married Carlos Soriano, a prominent Pagsanjan resident.

Juan was not the first or last of his extended family to serve Pagsanajan as mayor. Many municipal chiefs executive from the early 1900s up to the mid-1970s were members of the Fernandez, Lavadia, and Soriano families. One of Pagsanjan’s longest-serving mayors, Manuel Soriano, was the half-brother of Juan’s wife Damiana. Manuel was one of two children of Damiana’s mother Arcadia with Carlos Soriano.

Little is known about Juan’s father Vicente but there are indications that his mother Matea Lavadia was a woman of some wealth. In 1880, when Juan was about 22 years old, Matea was one of six pious Lavadia ladies who contributed jewelry and money to the making of a golden crown for the statue of the Our Lady of Guadalupe, patroness of Pagsanjan town.

The jewelry consist of a golden crown encrusted with diamonds and a diamond choker, bright, also a belt embedded with diamonds, a gold necklace also completely embedded with glitter, gold bracelet encrusted with diamonds, iron silver gilt where jewels are placed above, and other various pieces of gold-silver or gold for the decoration of the costumes, was how a judicial document described the ornaments.

Each year since 1880, the crown and other jewelry adorned the Image of Our Lady of Guadalupe during special church events, according to a document prepared in May 1941.

In 1904, one of Pagsanjan’s wealthy residents, the 84-year-old Josefa Gabino named Juan one of her two trusted executors to implement her last will and testament regarding the disposition of several pieces of agricultural land between her two daughters Damiana and Teresa. The other executor was Carlos Soriano, Juan’s stepfather-in-law. One of the witnesses was Roman Abaya, Pagsanjan’s elected mayor from 1903 to 1905.

Juan and Damiana put a high premium on schooling of their children, who mostly went through college and became professionals. They sent at least two of the Fabella children for graduate studies abroad. Aside from Vicente, his elder brother Jose studied in the United States, where he received his medical degree from Rush Medical College in Chicago in 1912. Jose also took advanced post-graduate courses at the Charite Krankenhaus in Berlin, Germany where he specialized in infant and children’s