BusinessMirror January 14, 2015

BusinessMirror

three-time rotary club of manila journalism awardee 2006, 2010, 2012

U.N. Media Award 2008

A broader look at today’s business

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By Lenie Lectura

he feared power crisis seems imminent, as a number of power plants in Luzon are scheduled for maintenance shutdowns and forced outages from January to July this year, with the most critical period being in March.

1 DAY INSIDE

great things come in ‘compact’ packages The balm of Your mercy

WORD AND LIFE, FR. SAL PUTZU, SDB AND LOUIE M. LACSON Word&Life Publications • teacherlouie1965@yahoo.com

Editor: Gerard S. Ramos • lifestylebusinessmirror@gmail.com

Life

WHAT 2014’S BIGGEST SOCIAL-MEDIA FAILS CAN TEACH US IN 2015... »D2

BusinessMirror

Wednesday, January 14, 2015

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Great things come in ‘Compact’ packages B G R Lifestyle & Entertainment Editor

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ACK in September, consumerelectronics giant Sony chose the 2014 edition of the annual Internationale Funkausstellung (IFA) in Berlin, Germany, to unveil the latest additions to its Xperia line of wirelesscommunications goodness, including its new flagship smartphone, the award-winning Z3, and its smaller but no less powerful sibling, the equally acclaimed Z3 Compact.

Since then, the Sony Xperia Z3 and Z3 Compact have made their way to retail stores around these parts and, for the Z3, become part of the postpaid offerings of leading wireless-communications provider Smart Communications Inc. Also now available in the company’s brick-and-mortar stores here is the Sony Xperia Z3 Tablet Compact, which was also introduced at IFA 2014 and its latest offering to the burgeoning tablet market.

The mouthful of a name may not roll off as easily as its best-selling smartphone cousins, but unlike them, not only does the tablet run Google’s Android goodness and appropriate the minimalist angular design language that Sony has embraced to much acclaim, but it is also one of the best buys, if not the best buy, in its product category.

With dimensions coming in at 8.40x4.87x0.25 inches, the Z3 Tablet Compact looks like a bigger but thinner version of Sony’s flagship smartphone. Yes, you will be tempted to hold it like a phone, and indeed you can do just that without unduly straining your wrist, given that this tablet is not only impossibly thin but also impossibly light at just 270 grams.

Of course, holding it up against your cheek to take or make a call—unlike many others in its category, the Long-Term Evolution (LTE)enabled Xperia Z3 Tablet Compact has GSM call functionality—might be pushing geek chic a bit too far, so we would suggest keeping a Bluetooth headset handy. That said, the tablet’s willowy profile makes it easy for you to slip it in and out of your purse or your bag, no problem.

Meanwhile, a quad-core Snapdragon 801 chipset with Adreno 330 GPU clocked at 2.5GHz plus 3 gigabytes of RAM help keep the tablet running with such buttery smoothness.

As with Sony’s other consumer-electronic devices, the construction of its new tablet offering is beyond reproach. There are no unsightly gaps where the different sides meet, and despite it being wafer-thin, the Z3 Tablet Compact betrays no yield in typical use and handling. The front of the tablet is protected by shatterproof glass with an oleophobic coating that makes it resistant to the buildup of fingerprints. Its plastic backside, on the other hand, has been given a matte finish, also to keep those paw marks at bay.

Like its smartphone siblings, the tablet boasts of IP65 and IP68 certification, which means that it is both dust-tight and waterproof, but do be mindful of closing the gurney flaps that cover the microUSB port and the nanoSIM and microSD slots before you take the Xperia Z3 Tablet Compact poolside. The memoryexpansion slot will happily take in cards packing as much as 128GB, and that’s a lot of movies and TV shows to watch on the go.

And speaking of movies and TV shows, this tablet makes media consumption such a compelling proposition with its 8-inch IPS LCD capacitive touchscreen packing 16 million colors, with a 1200x1920 pixel resolution and pushing a 283 ppi pixel density, along with excellent viewing angles. In plain consumer-speak, that means the Z3 Tablet Compact boasts of a full-high definition (1080p) screen—and, yes, it’s an utterly gorgeous screen, yielding vibrant colors and accurate whites and stark-black blacks. As with its smartphone offerings, Sony has also put into play here its proprietary Triluminos and X-Reality display technologies which, no doubt, help in upping the pleasure levels in media consumption.

We watched 2002’s Minority Report and a couple of episodes of the fifth series of Downton Abbey back-to-back, and it was a thoroughly gratifying experience. Needless to say, viewing the photos you snapped with the Xperia Z3 Tablet Compact’s solid 8.1-megapixel rear camera (there’s a 2.2-megapixel camera in front for selfies and videoconferencing) yields similar results. Meanwhile, text-only content looks crisp and clean.

Compulsive media consumption on a bigger screen—along with playing PS4 games on this PS4 Remote Play-powered tablet—can eat up a huge chunk of battery life of course. Mercifully, Sony has packed the Xperia Z3 Tablet Compact with a 4,500mAh battery that the company claims can power the tablet for a marathon viewing for much a flight from the Philippines to the US. It also threw in its Battery Stamina Mode technology to further battery life. In realworld use, we were able to not only sit through the Tom Cruise-starrer and again immerse ourselves in the lovely upper-class world of the Crawleys, but also do the usual social-media stuff, work on electronic missives and hunt for steamy photos of Irish actor Jamie Dornan on the Web using Globe Telecom’s greatly improved LTE network without the tablet warning us that we needed to plug in until early the following day.

Given the notorious battery life of most tablets in the market, that’s nothing less than impressive.

There’s a lot more that makes the Sony Xperia Z3 Tablet Compact the must-have gadget when you want a seamless fusion of sublime style and solid performance in a form factor bigger than a smartphone’s, and you can check it out at http://tinyurl.com/ohpy2wy. ■

life

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dwight’s day, not kevin’s

During the seven-month period, some six power plants and a number of their units are expected to go offline. Their total generating capacity will reach 3,780.6 megawatts (MW).

Data provided by industry sources showed that 1,060.6 MW of generating capacity will not be available from January to February, of which 302 MW will come from Unit 1 of the Mariveles coal-fired power plant,

which is scheduled to go offline for the entire January. Quezon Power’s 456.6-MW coal power plant will also not be available from January 17 to February 25. Unit 2 of Mariveles power facility, with a capacity of 302 MW, will also shut down for the entire month of February.

In March when the Malampaya natural-gas facility is scheduled to undergo a 30-day maintenance Continued on A2

AYALA CORP. BOSS OUTLINES PHL’s MAJOR COMPETITIVENESS CONCERNS

Sports BusinessMirror

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| WEDNESDAY, JANUARY 14, 2015 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao

KEVIN GARNETT is ejected after head-butting Dwight Howard (left). AP

By VG Cabuag

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DWIGHT’S DAY, NOT KEVIN’S B R B

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Newsday

EW YORK—Jay Z arrived in his customary courtside seats next to the Nets’ bench near the end of the first quarter, a bit too late for the fireworks between the guy who initially wanted to be in Brooklyn and another who had to be persuaded to waive his no-trade clause to come here.

Dwight Howard’s day, one that began with him hoisting shots inside the Nets’ arena for the very first time, had just gotten more intriguing.

Howard and Kevin Garnett became angry at each other during a brief altercation with seven minutes and 53 seconds remaining in the quarter, with Garnett head-butting Howard and getting ejected.

Howard was the one smiling when the final buzzer sounded, though. Behind James Harden’s 30 points and six assists, the Rockets beat the Nets, 113-99, at Barclays Center. It was their season-high sixth straight loss.

As many in the crowd of 16,115 were still settling in, Howard got fouled by Garnett while driving the baseline. Garnett wasn’t pleased,

giving Howard a slight shove with his right arm.

Howard retaliated by hitting Garnett in the upper chest area with his left hand.

That enraged Garnett, who fired the ball at Howard’s back and took two steps in his direction before head-butting him, sparking a brief confrontation. Howard swiped at Garnett with his right hand and the two had to be separated.

Rockets director of security Bryant Savage tried to corral Garnett, but the 38-year-old veteran was incensed, fighting through Trevor Ariza’s bear hug.

Nets director of team security Robert Masiello raced all the way over from their bench to help calm Garnett down. Even he had problems at first, unable to keep Garnett from wandering around aimlessly while barking choice words about Howard.

After a lengthy video review by the officials, each was hit with a technical foul and Garnett was given the heave-ho, leaving his teammates to fend for themselves while they tried to break out of one of their roughest stretches of the season.

Nets Coach Lionel Hollins said the referees told him Howard’s slap wasn’t a closed fist, which is why he wasn’t ejected.

“Those are the kinds of games you want to win, and we didn’t do that,” said Mason Plumlee (24 points, 10-for-11 shooting, 10 rebounds).

In the months leading up to the Nets’ move to Brooklyn in 2012, Howard initially made it known that this was his preferred destination, only to inexplicably opt into the final year of his contract, postponing his eventual free agency by a year.

That pretty much ended the Nets’ two-year “Dwightmare.” He was traded to the Lakers and spent a season in Los Angeles before landing in Houston in 2013 as a free agent.

“It was something at the time I thought would be the best move, but everything happens for a reason,” said Howard (eight points, five rebounds). “I was looking forward to one day being in Brooklyn at the time, but I found a great home in Houston. The team is playing exceptionally well. And we have a great opportunity to do something special.

“One thing I try to do is live without regrets.

There was a point in time I thought this was the best place for me to play basketball. I think when I opted in, that kind of changed everything.

“But Houston is a great place. I love where I’m at. I found a great home.”

“Even though I won’t be playing here in Brooklyn, I have a lot of family and friends. So it’s always fun to visit with those people.”

Elsewhere in the league, Orlando ended a six-game losing streak with a 121-114 win over Chicago; Detroit beat Toronto, 114-111, for its ninth win in 10 games; and Boston defeated New Orleans, 108-100.

Nikola Vucevic had 33 points and 11 rebounds and Victor Oladipo also scored 33 points for the Magic, which shot a season-high 59 percent from the field.

Orlando had lost three in a row and 12 of 15 against the Bulls since the start of the 2010-11 season.

In Toronto Brandon Jennings had 34 points and 10 assists and Greg Monroe had 22 points and 10 rebounds as the Pistons ended a fourgame losing streak against Toronto.

Jonas Valanciunas scored a career-best 31 points and had 12 rebounds for the Raptors, who lost for the fifth time in six games.

The Celtics won for the third time in their last 12 games.

Jared Sullinger had 27 points and 10 rebounds, and rookie Marcus Smart nailed a key three-pointer in the closing minute. With AP

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sports

CONVINCING COMEBACK

YDNEY—Juan Martin del Potro launched his comeback from a serious wrist injury with a convincing 6-3, 7-6 (4) win over Sergiy Stakhovsky in the first round of the Sydney International on Tuesday.

The former US Open champion is currently ranked No. 338 after undergoing surgery on his left wrist last year and missing more than 10 months on tour.

He needed a wild card to enter the main draw in Sydney, where he’s the defending champion, but looked fit and sharp in beating 69th-ranked Stakhovsky in 88 minutes. He will face top-seeded Fabio Fognini in the second round.

Del Potro delayed his comeback a week after pulling out of the Brisbane International tournament with residual pain in his wrist. But he looked unimpeded against Stakhovsky on Tuesday as he served seven aces and never faced a break point.

“These guys are playing all year. It’s time to get back on the train again,” del Potro said.

“This tournament is very special to me.”

It was del Potro’s second extended layoff with a wrist injury. After capturing his only Grand Slam title at the 2009 US Open, he underwent surgery on his right wrist and was sidelined for eight months.

Bernard Tomic, who was runner-up to del Potro in last year’s final, needed only 43 minutes to beat Igor Sijsling of the Netherlands, 6-1, 6-2. The Australian, ranked 71, served eight aces and converted four of six break points to swiftly progress to the second round.

In other results on Tuesday, Spain’s Carla Suarez Navarro upset sixth-seeded Ekaterina Makarova of Russia, 4-6, 6-1, 6-4, and Tsvetana Pironkova of Bulgaria advanced when American Madison Keys retired trailing 4-1 in the second set after winning the first.

The women’s top seed, Simona Halep, withdrew from the tournament on Tuesday with gastroenteritis.

In the Hobart International tournament, American Sloane Stephens, the fifth seed,

fell to Heather Watson of Britain, 6-3, 6-1.

Americans Bob and Mike Bryan, the world’s top-ranked doubles combination, suffered a shock 1-6, 7-6 (4), 11-9 loss to unseeded Andre Begemann of Germany and Robin Haase of the Netherlands in the first round of the Association of Tennis Professionals Tour’s Heineken Open in Auckland.

In singles, sixth-seeded Colombian Santiago Giraldo was beaten, 6-2, 6-3, in the first round by qualifier Kenny de Schepper of France. Spain’s Pablo Carreno Busta beat Croatian teenager Borna Coric, 6-4, 6-3.

Diego Schwartzman of Argentina defeated seventh-seeded Guillermo GarciaLopez of Spain, 6-2, 4-6, 6-1, while qualifier Jiri Vesely downed Thomaz Bellucci of Brazil, 6-3, 7-6 (4). AP

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living with a smile PRESIDENT MEETS CHAMPS President Barack Obama accepts a San Antonio Spurs team basketball jersey and signed basketball from (from left) Tim Duncan, Manu Ginobili and Tony Parker as the President honored the 2014 National Basketball Association champions during a ceremony in the East Room of the White House in Washington on Monday. AP

JUAN MARTIN DEL POTRO »returns to the court after a 10-month injury layoff with a rousing victory. AP

BusinessMirror

Wednesday, January 14, 2015 • Editor: Tet Andolong

LIVING WITH A SMILE

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YALA Land’s flagship development in Bacolod, Capitol Central, is the first master-planned, mixed-use community in the area. Envisioned to be the growth center of Metro Bacolod and Negros Occidental, Capitol Central stretches across 9 hectares of prime development, where history is fused with modern living.

Once named as “Best Place to Live in the Philippines,” Bacolod City is one of the busiest and most urbanized cities in the Visayas, giving families and individuals a lot of opportunities to succeed in life.

Continuing its promise to give an affordable condo living, Amaia, Ayala Land’s economic housing arm, launched recently a new property in Negros Occidental.

Set to rise right across Capitol

Central is Amaia Steps Capitol Central, a midrise project with nine floors and 288 residential units for its North Building. The project is along San Juan Street, Barangay 8, Bacolod City.

The new property is accessible to most transport stations, such as jeepneys, tricycles and even ferry stations. Bacolod-Silay International Airport is just 13 kilometers away from the project.

AMAIA Steps Capitol Central comes with swimming pools for adults and kids, children’s play area, landscaped gardens, jogging path and retail shops.

With Capitol Central’s developments, homeowners will be just a few minutes away from a major mall and hotel, allowing them to have better working opportunities.

Providing homeowners with a comfortable living in a highly urbanized area, Amaia Steps Capitol Central comes with a courtyard at the center of development, which is an area where residents can relax.

It comes with swimming pools for MARY ANNE O. CASTILLO (from left), lot owner’s daughter-in-law; Carlou C. Castillo, lot owner’s son; Flaviana C. Castillo; Perseverando M. Castillo; and Maria Guia C. Buenaventura, vice president for Sales of Citystate Properties and Management Corp.

Citystate Properties gives titles to new owners

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ITYSTATE Properties and Management Corp. (CPMC) turned over the Transfer Certificate of Title to Perseverando and Flaviana Castillo on January 3 for a lot he purchased at Nalé, Sandari Batulao.

The turnover took place at Crust Brick Oven Pizza. Sandari Batulao’s latest restaurant that serves hand-tossed Neapolitan-style pizzas using the finest of ingredients.

CPMC is the developer of Sandari Batulao, a luxurious ecocentric mountainside residential and leisure development, with majestic Mount Batulao as its backdrop. Sandari Batulao is 10 minutes away from Metro Tagaytay and 15 minutes away from the beaches of Nasugbu, Batangas.

Visit www. sandaribatulao.com.

property

adults and kids, children’s play area, landscaped gardens, jogging path and retail shops.

Future residents can choose from three unit types—studio, deluxe and premier—and enjoy the view of Talisay and Bacolod City, and, of course, the beautiful scenery of Guimaras Straight.

Like any Amaia property, this project will give you a peace of mind since it is designed with guarded en-

AMAIA Steps Capitol Central comes with a courtyard at the center of development, which is an area where residents can relax. trance and exits, a perimeter fence and closed-circuit television cameras.

There are also two elevators per building and naturally ventilated hallways for homeowners’ comfort and convenience.

A pocket-friendly buying experience is also ensured since Amaia offers different paying schemes to help you get your dream home easily. Available paying options are

cash payment, deferred, Pag-IBIG, bank and in-house financing.

As with every Amaia project, Amaia Steps Capitol Central is further ensured by the Makati Development Corp. BuildPlus and Ayala Property Management Corp., both trusted for maintaining a secure and livable community.

Visit www.amaialand.com.

GOVERNMENT TRANSPARENCY VITAL IN ATTRACTING FOREIGN CAPITAL B R R R

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LTHOUGH more are interested to invest in the country’s real-estate industry, the government should tackle the major issues, such as government transparency, to prove the country is serious in attracting foreign capital.

Gerard de Guzman, Jones Lang LaSalle (JLL) senior manager for capital markets, said the country should be ready to carry the momentum of 2014 as foreign capital looks for potential investments brought about by the impressive growth of the property sector last year. He added that foreign investors will be adopting a cautious mode before going full blast in their investments. “They are doing some trials to check the economy.”

Government transparency is a major factor for foreign capital before they increase their participation in the country’s property sector.

“At this time, they want to go slow

to check the real situation of the country,” he said.

De Guzman also said the economic stability is also high on the list of foreign investors. He added that investors want development to be diversified into other areas, specifically outside Metro Manila, to spread economic growth. “They want areas outside Bonifacio Global City [BGC] to be developed,” he added.

“Another important issue is the limited ownership of 40 percent. Foreign investors want a bigger stake in their investments,” he said.

De Guzman said the government must also tackle the infrastructure challenge. He added that the country might lose its appeal to investors if the problems in this sector could not be solved.

On his part, JLL CEO David Leechiu said foreigners will be looking for high-yielding property investments in the country. “We’re very excited on tourism. Developers today are embark-

ing on large-scale tourism projects.”

“Foreign investors are excited in developing master-planned development projects, such as the ones found in Phuket in Thailand and Bali in Indonesia.”

To complement this effort, Leechiu said the government must develop seaports and other infrastructure to make these islands accessible.

However, Lizanne Tan, head of tenant representation of JLL, said “rental rates are expected, to maintain its current level, and in some areas may continue to move upward due to strong demand. BGC and Ortigas rentals are expected to go up because of high demand.”

“Precommitments for office space will continue as companies are becoming more aggressive and focused on their office-space requirements,” Tan added.

For 2015 Tan said there will be expansions in decentralized locations, including provincial areas going up due to numerous developments by established developers.

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Get ready for power outages T

HANK You, Lord Jesus, for coming to share our lot as broken and wounded human beings. Heal our brokenness, Lord, with the balm of Your mercy; strengthen our weaknesses with the power of Your grace and mercy; brighten our future with the light of Your promise to take us all to the abode of the Father, our true home. Extend oh Lord, the balm of Your mercy especially to places where there is war. Amen!

Tuesday, November Wednesday, January18, 14,2014 2015Vol. Vol.1010No. No.4097

DATA SHOW CRISIS IMMINENT AS POWER PLANTS WITH TOTAL CAPACITY OF 3,780 MW TO GO OFFLINE JAN-JULY

PAPAL VISIT 2015

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he Philippine economy may have been experiencing growth over the past years and continuing to become one of Asia’s brightest spots, but the government still needs to do more in the aspects of governance and infrastructure development to compete with its neighbors and succeed, the head of one of the country’s top conglomerates said.

Fernando Zobel de Ayala, president and COO of Ayala Corp., said much still needs to be done in cutting bureaucratic processes, mainly in key transactions, such as starting a business, registering a property, getting credit and protecting investors.

It usually takes a “grueling” 15 procedures spanning over 35 days to establish a business, compared

PESO exchange rates n US 44.8640

with Malaysia, only which requires three steps in six days, he said.

“Given where we are now as a country, it is imperative that the current momentum of structural and governance reforms that the current administration has put in place be continued,” Ayala said in his speech at the Financial Executives Institute of the Philippines.

“The highest standards of governance must be maintained and reform measures must be continued in the next administration if we want to sustain our growth momentum,” he added.

In a span of few years, the country’s image as a graft-ridden bureaucracy has changed, while strong investor appetite has catapulted the country’s stock market to new record highs. The benchmark See “Ayala,” A2

DRY RUN The popemobile in jeepney design passes along Roxas Boulevard in Pasay City on Monday during the papal-convoy dry run. The dry run is part of massive security preparations and information campaign to ensure that the visit of Pope Francis to the country from January 15 to 19 will be peaceful and orderly. KEVIN DE LA CRUZ

₧393.83-B new projects OIL EXTENDS lined up for ICC review DROP TO NEAR

By Cai U. Ordinario

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he joint Technical Board and Cabinet Committee of the interagency Investment Coordination Committee (ICC) will be evaluating at least P393.83 billion worth of projects in its first meeting for 2015 on Wednesday.

To be discussed include publicprivate partnership projects, such as the P374.5-billion Makati-PasayTaguig Mass Transit System Loop (MTSL) Project; and the P19.33billion Motor Vehicle Inspection System (MVIS). “[The list consists of projects] that have not gone through [the] Technical Board and, therefore, we need to bring it up now to take advantage of an early approval before people go into campaign

[mode],” National Economic and Development Authority (Neda) Deputy Director General for Programming Rolando G. Tungpalan said on the sidelines of the signing ceremony for the EU Multiannual Indicative Program 2014-2020 on Wednesday.

The 12-kilometer MTSL will connect the fast-developing Bonifacio Global City, Makati Central Business District and the Mall of Asia area in Pasay City. The MVIS project, on the other hand, involves the setting up of Motor Vehicle Inspection Centers to test various categories of heavy-duty, light-duty and two-wheel vehicles nationwide.

Tungpalan said the list includes the expansion of the TarlacPangasinan La Union Expressway to See “ICC,” A2

$45; GLUT SEEN WORSENING

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il extended losses to trade near $45 a barrel amid speculation that US crude stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than five-and-a-half years.

Futures fell as much as 1.9 percent in New York, declining for a third day. Crude inventories probably gained by 1.75 million barrels last week, a Bloomberg News survey shows before government data due on Wednesday. The United Arab Emirates, a member of the Organization of the Petroleum Exporting Countries (Opec), will stand by its plan to expand See “Oil,” A2

n japan 0.3792 n UK 68.0946 n HK 5.7865 n CHINA 7.2319 n singapore 33.6337 n australia 33.7798 n EU 53.1010 n SAUDI arabia 11.9494 Source: BSP (13 January 2015)

News BusinessMirror

Wednesday, January 14, 2015

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Get ready for power outages Continued from A1

shutdown, the two units of the Ilijan power plant, which is fed by natural gas coming from the Malampaya facility, will be offline from March 15 to April 15. These two units have a total generating capacity of 1,200 MW. Also in March, the Sta. Rita Module 10, with a capacity of 257 MW, will be offline for five days starting March 21.

There are no planned power-plant outages in April.

For the entire months of May and June, Masinloc 1 (315 MW) and Pagbilao 1 (382 MW), will not operate.

Units 2 of Masinloc (315 MW) and Pagbilao (382 MW) coal-fired power plants will be offline in July. Also in July, the 251-MW Sta. Rita Module 40 will not be operational from July 15 to 19.

The National Grid Corp. of the Philippines (NGCP), according to a regulatory filing by the Manila Electric Co. (Meralco), said for the period of January 26 to July 25, 2015, the reserve capacity will be below the required contingency reserves due to the scheduled maintenance shutdowns and forced outages of major base-load and gas-fired power plants in Luzon.

When sought for further comment, the NGCP said it would release a final report on this soon. Based on the Department of Energy’s (DOE) latest projection, Luzon would need 782 MW, of which 135 MW are needed to meet the required regulating reserve, and 647 MW to meet the required contingency reserve.

The DOE has warned of power shortage starting mid-March when the Malampaya natural-gas facility goes on a one-month maintenance shutdown until April 15.

The gas facility supplies power to the 1,200-MW Ilijan combined cycle naturalgas plant owned by Kepco Philippines Corp., 1,000-MW Sta. Rita; and 500-MW San Lorenzo natural-gas power plants owned

by First Gen Corp. of the Lopez group. In all, the Malampaya deepwater, natural gasto-power facility accounts for 40 percent of Luzon grid’s requirements.

As a consequence, Energy Secretary Carlos Jericho L. Petilla had said the output of the power plants that are fueled by the Malampaya facility would be affected. Another major factor that would lead to a power crisis is the unscheduled power outages of old power plants, notwithstanding the list of projected power-plant outage provided by the sources.

“The big problem really happens when one, or more than one, power plant conks out unexpectedly. Where do we get the power that is supposed to be supplied by that power plant that just broke down?”

Petilla pointed out.

ILP may not be not enough

WITH barely three months left before an anticipated power crisis in Luzon happens, the government scouts for more Interruptible Load Program (ILP) participants and banks on the issuance of a joint resolution that will grant President Aquino “special powers” to make the program work.

“As far as I am concerned, the ILP can still be recruited up to the start of summer but we need Congress’s issuance of the joint resolution for this to be operational,” Petilla said.

ILP works by calling on business customers with loads of at least 1MW to run their own generator sets, if needed, instead of drawing power from the grid.

Based on latest ILP figures, the program is still not enough to cover for the projected power-supply gap. Still, the DOE continues to hold negotiations with prospective ILP participants.

“In times like this, we need the collective effort and assistance of those who are willing to extend their hands…our search have never been in vain. In fact, ILP participants

have been growing, reflecting the private sector’s role in this initiative,” Petilla said.

Meralco said it has signed up a committed interruptible load of 205 MW as of January 5.

“Among captive customers, compared to the December 15, 2014 update, we signed up two additional services, Sunlife of Canada & Serendra, equivalent to 2.24 MW of interruptible load. This brings the total signedup interruptible load to 205 MW, from 43 companies with 160 services. We are still compiling updates on ILP participants of customers already being served by Retail Electricity Suppliers,” Meralco Spokesman Joe Zaldarriaga said when sought for an ILP update.

As early as December 2013, the DOE has informed Meralco of the need to introduce the ILP as a last resort. The three largest participants are SM Prime Holding Inc. (57.96 MW), Robinsons Land Corp. (23.15 MW) and Waltermart Malls (14.30 MW).

The ILP is included in the joint resolution of both the House of Representatives and the Senate.

The House of Representatives approved on third and final reading the House Joint Resolution 21 granting the President additional powers to address the possible power crisis.

Petilla said the Senate will issue its own version of the resolution. “The earlier, the better,” said the energy chief, who could not stress enough the importance of the issuance of the joint resolution, saying it’s not going to solve the problem should Senate not approve it. “Section 71 states joint resolution, hence, House and Senate signing one document,” Petilla added.

For the energy chief, preparation is still the best solution. But with barely three months left before the power shortage is felt, this question remains: “Is there enough preparation to avert the anticipated power crisis?” Petilla’s answer: “We will find out in three months.”

3-DAY EXTENDED FORECAST JANUARY 14, 2015 | WEDNESDAY

TODAY’S WEATHER

Northeast Monsoon locally known as “Amihan”. It affects the eastern portions of the country. It is cold and dry; characterized by widespread cloudiness with rain showers.

Oil. . . Continued from A1

output capacity even with “unstable oil prices,” according to Energy Minister Suhail Al Mazrouei.

Oil slumped almost 50 percent last year, the most since the 2008 financial crisis, as the US pumped at the fastest rate in more than three decades and Opec resisted calls to cut production. Goldman Sachs Group Inc. said crude needs to drop to $40 a barrel to “rebalance” the market, while Sociéte Généralé SA also reduced its price forecasts.

“There’s adequate supply,” David Lennox, a resource analyst at Fat Prophets in Sydney, said

Philippine Stock Exchange index climbed to 7,400 points, and just achieved a new record high last week, when five years ago it was only at the 4,000-point level. Ayala, who is also chairman of Ayala Land Inc., the country’s second-largest property developer, said the family now has 18 publicly listed companies that have P10 billion and above in net income, while half a decade ago it only had seven.

Despite the country’s rapid growth, however, the vast majority of the population still has to feel

ICC. . . Continued from A1

four lanes to meet safety requirements and the West extension of the Light Rail Transit Line 2 to Divisoria.

Further, Tungpalan said a concessional loan from the Austrian government for the purchase of 76 fire trucks for the Bureau of Fire Protection (BFP) is up for discussion.

The Neda official said the 76 new fire trucks will be purchased under the second phase of the project to address the shortfall in the number of fire trucks of the BFP. In 2013 the Austrian government provided a concessional loan to the Philippines to purchase 76 fire trucks for cities nationwide.

“Personally, I think it should not be distrib-

JAN 15 THURSDAY

JAN 16 FRIDAY

21 – 30°C

21– 31°C

TUGUEGARAO

19 – 29°C

18 – 29°C

JAN 17 SATURDAY

uted equally. It should be focused on where these firefighting equipment is needed the most, especially if you’re talking about big trucks,” Tungpalan said.

The ICC evaluates the fiscal, monetary and balance of payments (BOP) implications of major national projects, and recommends to the President the timetable of their implementation on a regular basis.

The committee also advises the President on matters related to the domestic and foreign-borrowing program, as well as submits a status of the fiscal, monetar y and BOP implications of major national projects.

3-DAY EXTENDED FORECAST

JAN 15 THURSDAY

JAN 16 FRIDAY

JAN 17 SATURDAY

22 – 31°C

METRO CEBU

22 – 30°C

22 – 29°C

21 – 29°C

18 – 29°C

TACLOBAN

22 – 29°C

21 – 29°C

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19 – 29°C

CAGAYAN DE ORO

22 – 29°C

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21 – 29°C

METRO DAVAO

22 – 30°C

22 – 29°C

22 – 29°C

23 – 32°C

(AS OF JANUARY 13, 5:00 PM)

BAGUIO TUGUEGARAO CITY 20 – 29°C

SBMA/ CLARK

BAGUIO CITY 11 – 23°C SBMA/CLARK 21 – 29°C TAGAYTAY CITY 18 – 29°C

TAGAYTAY

19 – 29°C

11 – 23°C

22 – 30°C

19 – 29°C

18 – 29°C

11 – 22°C

22 – 31°C

19 – 29°C

11 – 22°C

22 – 32°C

LEGAZPI ILOILO/ BACOLOD 24 – 30°C METRO CEBU 23 – 30°C

TACLOBAN CITY 23 – 28°C

CAGAYAN DE ORO CITY 23 – 29°C

ZAMBOANGA CITY 23 – 32°C

PUERTO PRINCESA

ILOILO/ BACOLOD

23 – 30°C

22 – 30°C

ZAMBOANGA

SUNSET

MOONSET

MOONRISE

6:24 AM

5:45 PM

12:14 PM

12:13 AM

21 – 30°C

HALF MOON NEW MOON

23 – 31°C

23 – 31°C

24 – 32°C

22 – 29°C

JAN 20

9:14 PM

Cloudy skies with rain showers and/or thunderstorms.

Partly cloudy to at times cloudy with rainshowers

Weekday hourly updates: 6:00 AM on Balitaan, 7:00 AM & 8:00 AM on Good Morning Boss!, 9:00 AM, 10:00 AM, 11:00 AM, 12:00 PM, 1:00 PM on News@1, 3:00 PM, 4:30 PM, and 6:00 PM on News@6

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SABAH CELEBES SEA

9:23 AM

0.16 METER

Partly cloudy to cloudy skies with isolated rain showers and/or thunderstorms

Watch PANAHON.TV everyday at 5:00 AM on PTV (Channel 4).

METRO DAVAO 23 – 30°C

LOW TIDEMANILA HIGH TIDE SOUTH HARBOR

JAN 13

24 – 32°C

23 – 32°C

SUNRISE

5:46 PM

24 – 31°C

23 – 30°C

18 – 30°C

LEGAZPI CITY 24 – 29°C

PHILIPPINE AREA OF RESPONSIBILITY (PAR)

the economic expansion. “I don’t believe we can achieve sustainability or become a truly progressive country, unless we can pull a much larger segment of our country from poverty and ensure a broader-based development,” Ayala said.

“It is unacceptable that over 70 percent of Filipinos do not have access to any form of saving or lending mechanisms. It is equally discouraging to note that 40 percent of municipalities in the Philippines do not have any physical access to a bank,” he said.

NORTHEAST MONSOON AFFECTING LUZON.

LAOAG CITY 19 – 30°C

PUERTO PRINCESA CITY 25 – 30°C

by phone. “It’s really going to take someone from the supply side to step up and cut, and the only organization capable of doing something substantial is Opec. I can’t see the US reducing output.” West Texas Intermediate for February delivery decreased as much as 89 cents to $45.18 a barrel in electronic trading on the New York Mercantile Exchange and was at $45.34 at 12:48 p.m.

Singapore time. The contract lost $2.29 to $46.07 on Monday, the lowest close since April 2009.

The volume of all futures traded was about 53 percent above the 100-day average. Bloomberg News

Ayala. . . Continued from A1

METRO MANILA

LAOAG

METRO MANILA 20 – 31°C

news@businessmirror.com.ph

@PanahonTV

5:06 AM

0.66 METER

The Nation BusinessMirror

news@businessmirror.com.ph

Pagasa expects rainy welcome for Pope Francis

E

XPECT light to moderate rains in Tacloban and light rains in Metro Manila during the pope’s visits to the areas.

The Special Weather Outlook that the Philippine Atmospheric Geophysical and Astronomical Services Administration (Pagasa) issued on Tuesday said passing light rains to moderate rains are expected from Wednesday to Monday in Metro Manila, and light to moderate rains in Tacloban from Wednesday to Sunday.

Pagasa noted that Metro Manila is forecast to experience good weather, along with moderate blowing of the northeast monsoon and light rains from Wednesday to Saturday.

On Sunday it will have moderate rains and moderate to occasionally strong winds owing to the incoming low pressure area (LPA)—which will be named Amang—if it strengthens into a storm.

Pagasa said the LPA will likely

turn into a tropical depression.

On Monday the National Capital Region will experience cloudy skies, light to moderate rains and moderate winds.

Tacloban, on the other hand, is also projected to have good weather with light rains and light winds from Wednesday until Thursday.

The state-run weather bureau added that on Friday, the area will experience light to moderate rains.

By Saturday Tacloban can expect moderate to occasionally heavy rains with thunderstorms and moderate to strong winds, prevailing from the expected LPA. For Sunday, Pagasa forecasts cloudy skies with light to moderate rains and moderate to occasionally strong winds in Tacloban, while on Monday it will experience moderate winds but will have overall good weather.

Meanwhile, Pagasa prepositioned on Tuesday the X-radar, a mobile Doppler radar which will serve as a temporary replacement for the damaged stationary Doppler radar in Guian, Eastern Samar.

It is a weather apparatus which estimates rainfall amount and can read movements of weather disturbances but has less range than stationary Dopplers by 200 kilometers in diameter. Five hundred kilometers is the range of the stationary Doppler, while the X-radar is 300 km.

The equipment is scheduled to be deployed to Palo, Leyte, during the papal visit. PNA

Deployment of troops, cops for pope’s visit complete

P

T

Along with the deployment of forces, the National Police officer in charge, Deputy Director General Leonardo Espina, placed the entire force on full alert starting on Monday.

Full alert is the police equivalent of the military’s red alert. When such alert is raised, all personnel are required to be in their assigned posts at all times, and all leaves and furloughs are canceled.

The full-alert status was to ensure the availability of all personnel to perform police duty for the pope’s visit, which is expected to gather at least 6 million people.

“We are putting our best foot forward in this historic national event. We have started preparations since last year. We have rehearsed and fine-tuned all our systems and

“The Philippines affirms its commitment to fighting impunity. We condemn the most serious crimes of concern to the international community. Together, we should ensure that perpetrators account for their crimes,” he added.

Ledda also expressed the Philippines’s support for achieving ICC universality, and urged countries that have yet to ratify or accede to the Rome Statute, particularly those in the Asia-Pacific region, to do so.

He added that the Philippines pays close attention to the ongoing judicial proceedings, investigations, and preliminary examinations of the court, and expressed concern about present developments.

“The work of justice is never easy. But the reality is that justice can be particularly complicated and difficult in countries affected if not devastated by violence and conflict,” Ledda said. Recto L. Mercene

Ombudsman junks pleas of 5 ex-congressmen in Pdaf case

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HE Ombudsman has upheld the findings of probable cause against former congressmen Rizalina SeachonLañete (Masbate); Rodolfo Plaza (Agusan del Sur); Samuel Dangwa (Benguet), Constantino Jaraula (Cagayan de Oro City); and Edgar Valdez (Apec party-list group) in connection with the alleged misuse of the Priority Development Assistance Fund (Pdaf) totaling P339 million.

Also facing criminal indictments are Janet Lim-Napoles, Budget Undersecretary Mario Relampagos, and Department of Budget and Management officials Rosario Nuñez, Lalaine Paule and Marilou Bare.

Likewise, impleaded as coaccused are officer-representatives of the implementing agencies—Technology Resource Center Director General Antonio Ortiz, Deputy Director General Dennis Cunanan and others; National Agri-Business Corp. President Alan Javellana and others; National Livelihood Development Corp. President Gondelina Amata and others.

The officer-representatives of the non-governmental organizations (NGOs) also impleaded in the case included the Countrywide Agri and Rural Economic and Development Foundation, Masaganang Ani para sa Magsasaka Foundation Inc., Philippine Social Development Foundation Inc. and the Social Development Program for Farmer Foundation Inc. In five separate orders, Ombudsman Conchita CarpioMorales denied the motions for reconsideration filed by respondents, considering that their pleadings were pro-forma, or verbatim repetitions, of the issues and claims raised in their counteraffidavits, which were previously duly considered and already passed upon by the Office of the Ombudsman in its October 2014 joint resolutions.

Lañete, Jose Sumalpong, Napoles and de Asis Valdez, face separate plunder charges.

The Ombudsman also upheld the finding against them and their respective sets of respondents for multiple counts of violation of Section 3(e) of Republic Act (RA) 3019, or the Antigraft and Corrupt Practices Act. Plaza, Dangwa and Jaraula and their respective sets of respondents face charges of malversation, direct bribery and violation of Section 3(e) of RA 3019. PNA

Warning out against bringing in stun guns, similar items to HK

O

By Rene Acosta

ERSONNEL and other resources of the National Police that are assigned to secure the pope have been mobilized, and are already deployed in their assigned areas.

PHL pushes rules-based intl relations

he Philippines reaffirmed its commitment to fight impunity and pushed for a rules-based international relations among states at the 13th Assembly of states Parties to the Rome Statute of the International Criminal Court (ICC).

The Philippine Ambassador to the Netherlands and head of the Philippine delegation to the assembly, Jaime Victor B. Ledda, underscored the country’s commitment to advance global peace.

“Modern international relations continue to mature from one that is power-based, to one that should be rules-based,” Ledda said.

“This is the power and majesty of the rule of law.

Without it, there would not be international criminal justice, and without international criminal justice, global peace would not be possible,” Ledda said during the general debate.

Editor: Dionisio L. Pelayo • Wednesday, January 14, 2015 A3

WING to the high number of arrests and convictions, the Philippine Consulate General in Hong Kong warned Filipino travelers transiting or entering Hong Kong against bringing restricted items, particularly stunning devices, in their hand-carried or checked-in luggage.

At least 81 Filipinos, many of them seamen, have been convicted of possession of arms without license in 2014 in the former British Crown colony.

Under Hong Kong’s Firearms and Ammunition Ordinance, travelers are banned from bringing in stunning devices at all the territory’s ports, the consulate said.

“Offenders will be arrested by Hong Kong police and prosecuted by Hong Kong courts and may face a penalty of up to HK$100,000 or approximately $13,333, and a maximum prison sentence of 14 years.”

A similar appeal was made by Vice President Jejomar C. Binay early this month.

As presidential adviser on Overseas Filipino Workers Concerns, Binay reminded Filipinos headed to the Hong Kong Special Administrative Region (SAR) not to bring restricted items, such as stun guns and similar devices in their hand-carried or checked-in baggages.

Binay said stun guns and other devices, such as tear-gas guns, bullets, extendible batons, flick knives and knuckle dusters, are considered “arms” that are under the Firearms and Ammunition Ordinance of SAR. “I’m calling on our countrymen to be careful and do not attempt to bring prohibited items in Hong Kong,” Binay said. Recto L. Mercene

ESPINA: “We are not leaving anything to chance in our preparations for the visit of Pope Francis, and we have drawn contingencies for every foreseeable scenario.”

procedures for this event, such that we have established full backup system that will address any unforeseen situation that may arise,” Espina said.

“We are not leaving anything to chance in our preparations for the visit of Pope Francis, and we have drawn contingencies for every foreseeable scenario,” he added.

A total of 25,000 PNP personnel will provide operational support to the Presidential Security Group, which is tasked to provide close-in security and safety services to the pope and his entourage.

The police contingent will also conduct security operations in the different venues of engagement of the pope, while other police units will provide public safety assistance needed to maintain order, as well as crowd control; ensure the smooth flow of vehicular and pedestrian traffic; and provide route direction, parking instructions and venue security.

Even as he begged the indulgence of the public, who will be “inconvenienced” by the National Police security plan, Espina shared the opinion of President Aquino that the “people are the key for this to be organized and peaceful.”

“We appeal to the public for their understanding and cooperation in security measures that are being implemented by the police. While the government is in close coordination with Church leaders and the private sector to ensure the success of the papal visit, the people’s cooperation would be most crucial,” he said.

Meanwhile, four companies, or around 400 soldiers from the Armed

Forces Southern Luzon Command (Solcom), would be flown to Tacloban City to augment security requirements for the pope’s visit there.

A Navy boat from Naval Forces Southern Luzon will also be prepositioned at the Matnog Port in Sorsogon, while additional UH-1H “Huey” helicopters will be prepositioned in Legazpi City to ensure the safety of people who are traveling to see Pope Francis during his visit to the country. “We expect influx of commuters, especially at Matnog Port, and we hope nothing untoward happens,” said Maj. Gen. Ricardo Visaya, Solcom chief.

He said the prepositioning of naval and air assets to Bicol will enable the military to react immediately to any eventuality.

Earlier, the Solcom directed all units to beef up security measures along national roads and major ports in the region in coordination with the National Police and the Coast Guard to ensure the safe passage of people traveling for the papal visit from January 15 to 19.

“We are preparing well for the security of the pope, pilgrims and devotees, as well as for those who just want to see him so that all undertakings shall go unhampered,” Visaya said.

A4

Economy BusinessMirror

Wednesday, January 14, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

Chinese travel ban impacts visitor arrival to Philippines

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By Ma. Stella F. Arnaldo | Special to the BusinessMirror

HE number of Chinese tourists to the Philippines fell by 50 percent to 19,530 in October 2014 from October 2013, following the Chinese government’s ban on its residents from traveling to the Philippines last September.

The huge drop in Chinese travelers in October pulled down the total visitor arrivals from the market by 3.2 percent to 354,202 from January to October 2014, according to data from the Department of Tourism (DOT). On a month-on-month basis, arrivals from China slowed down by 25 percent in October 2014 from September 2014, when the travel advisory was issued.

The DOT and the private sector remained optimistic, however, that, with the recent holiday season, as well as the strong promotions of the local travel industry, the increased arrival of other foreign tourists will make up for the contraction in the Chinese market.

In an interview with the BusinessMirror, Tourism Spokesman and Undersecretary for Market Development Benito Bengzon Jr. said: “The travel advisory issued in September 2014 has slowed down visitor arrivals from China [in October 2014]. Overall, however, total foreign visitor arrivals in the country for the first 10 months of last year still posted an increase of over 2 percent.”

He added, as November and December are traditionally peak travel months, “we expect the overall growth rate to increase once the final figures [for 2014] are collected.”

Despite the dip in Chinese travelers, the DOT reported that the market contributed P7.55 billion in tourism receipts from January to October 2014, making them the fifth-largest spenders during the period.

The Chinese government issued a travel advisory in September last year due to a spate of kidnappings and killings of Chinese citizens in the Philippines.

For her part, Aileen Clemente, president of Rajah Travel Corp., said the fall in the Chinese market was anticipated, and, as such, “the portfolio of top tourist arrivals will just have to change. While there will be a slowdown, we have not stopped efforts in promoting to other destinations.”

She added that, with the integration of the Association of Southeast Asian Nations into one economic community this year, more foreign tourists will visit the country. “We are stronger in our promotion of the region and not just the Philippines.”

The private sector believes that the DOT missed its foreign-visitor arrivals target of 6.8 million in 2014, due to the lingering impact of Supertyphoon Yolanda (international code name Haiyan), which struck the Visayas region in late 2013, the migration of the South Korean market to other cheaper Asia-Pacific destinations and the Chinese travel ban.

Meanwhile, DOT data showed, from January to October 2014, visitor arrivals grew by 2.3 percent to 3.96 million, generating total tourism receipts of P172.65 billion, up by 7.14 percent from the same period in 2013.

For October 2014 alone, visitor arrivals rose by 0.14 percent to 358,876, almost unchanged from October 2013’s arrivals.

Tourism receipts in October 2014 were up 8 percent to almost P15 billion.

South Korea accounted for 28 percent of total tourism receipts for the 10-month period at P48.62 billion, followed by the US (P33.61 billion); Australia (P11.04 billion); and Japan (P8.98 billion).

Foreign visitors spent an average of P4,863.26 per person, daily in October 2014, up by 10.7 percent from October 2013. They also stayed up to 10.12 nights per person, 16.06 percent longer than the same month in 2013. On an average per-capita basis, foreign visitors spent P49,216.19 during their stay in the Philippines.

The top visitor markets for the 10-month period to October 2014 were South Korea (958,289 arrivals); the US (592,204), Japan (382,633); China (354,202); Australia (173,954); Singapore (146,996); Taiwan (121,077); Hong Kong (94,398), Canada (111,391); Malaysia (110,407); the United Kingdom (107,499); and Germany (57,847).

Export group airs misgivings on BOC’s cargo-stuffing order

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he Philippine Exporters Confederation Inc. (PhilExport) has expressed its opposition for the implementation of the Bureau of Customs’s (BOC) stuffing policy for outbound cargoes, saying that the order poses yet another nontariff barrier to trade that will create a veritable breeding ground for graft-and-corrupt practices.

“While the BOC is merely reviving an existing policy that has not been implemented, we have serious misgivings about it, as it presents another opportunity for graft and corruption. Inspection may be random, but will still require signatories that pose situations for ‘table certification’ due to the administrative and technical costs and difficulties of implementing this policy,” PhilExport President Sergio R. Ortiz-Luis said in a position paper submitted to Customs Commissioner John Philipp P. Sevilla.

Ortiz-Luis issued PhilExport’s position after the Philippine Chamber of Commerce and Industry issued a similar statement rejecting the implementation of the Customs’s order.

The stuffing policy is enshrined in Section 16 of Customs Memorandum Order 22-2010, or the Revised Customs Operations Manual, which essentially requires the presence and supervision of the stuffing inspector during the actual loading of export cargoes in container vans until the clearance and closure of the container vans.

The said policy has been set for full implementation on January 15.

Ortiz-Luis said that given the insuf-

ficient resources and communication facilities of the Customs’s bureau, there is a possibility of corrupt practices to take place just to speed up the processing. He added that the new policy is a nonrevenue-generating policy that just serves as a barrier to trade.

The Customs order, Ortiz-Luis said, stipulates that all incidental expenses incurred by the stuffing inspector during the process will be shouldered by the exporters, shippers, or container yard—container freight station operators.

He suggested there are other ways to determine legitimacy of exports other than the stuffing policy, including “the implementation of commodity clearances and the Client Profile Registration System, under which an annual plant inspection is being conducted.”

“Otherwise, we know of no other country, especially in Asean, that implements this policy simply because they see no benefit from such,” Ortiz-Luis added.

Of special concern, according to OrtizLuis, are the small and medium enterprises that can barely afford warehouse space to store containers if they face delay in waiting for BOC personnel/stuffing inspectors.

The country’s exporters similarly appended questions for the Customs’s response on other areas of concern, such as the recourse for compensation for exporters, if a shipment deadline is missed due to the new policy and the deployment of BOC employees in the regions. Catherine N. Pillas

Economy BusinessMirror

news@businessmirror.com.ph

EU doubles assistance to PHL

By Cai U. Ordinario

T

he Philippines will receive a total of P17 billion worth of official development assistance (ODA) grants from the European Union (EU) in the next seven years.

The amount, which is part of the EU Multiannual Indicative Program 2014-2020, is more than double the P7 billion worth multiyear assistance it extended to the Philippines from 2007 to 2014 period.

“The significant increase in aid has been granted in the context of the progressive improvement of governance under the current administration. Emphasis will be on achieving concrete results and maximizing the impact of the EU funding provided to the benefit of Filipinos across the country,” EU Ambassador Guy Ledoux said on Tuesday at the signing ceremony of the multiyear program.

The EU intends to focus on key development areas, the rule of law and energy. The rule of law projects will focus on governance issues, while energy projects will focus on renewable energy, grid management, and other related concerns.

Ledoux told reporters that Mindanao will get a higher share of the EU’s total ODA in the next seven years. However, no cost estimates were made available to the public as of press time.

National Economic and Development Authority (Neda) Deputy Director General Rolando Tungpalan explained that the list of projects will go through the interagency Investment Coordination Committee (ICC) that decides on ODA-funded projects, among others.

“The two major programs will go through the Investment Coordination Committee process and Congress itself will ask Neda to specify how this is distributed. So there will be a process as we move on to project development,” Tungpalan said.

The EU, however, stated in a report that the multiyear program will finance a nationwide rural electrification program that will provide some 500,000 Filipinos access to electricity.

The report also said that EU will work in cooperation with the Supreme Court and the national government in implementing a justice sector reform program during the assistance period.

The EU also intends to continue its humanitarian assistance, particularly in quick response to disasters similar to typhoons Yolanda, Pablo and Ondoy, as well as the Bohol earthquake.

To help areas affected by Yolanda, EU member-states extended a total of around £458 million, or P23.82 billion worth of assistance to the Yolanda corridor.

When this assistance is combined with the European Commission, the total assistance received by the Yolanda corridor from Europe reached a total of £502 million, or P26.1 billion.

Tungpalan said the total trade between the EU and the Philippines in 2013 reached $12.8 billion, or around P574 billion, making the EU the country’s fourth-largest trade partner.

However, he added that with the granting of the Generalized Scheme of Preferences Plus (GSP+), status to the Philippines by the EU, more Philippine products can find their way into European markets.

“With the recent decision of the European Parliament to grant the Philippines a GSP+, or a Generalized Scheme of Preferences Plus status, a significant increase in exports to the EU is expected. This milestone made the Philippines the 14th beneficiary country to be granted GSP+ status by the EU and the only one in the Asean region,” Tungpalan said.

SC orders DOTC to justify MRT, LRT fare hikes

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By Joel R. San Juan

HE Supreme Court (SC) ordered the government on Tuesday to justify the fare increase it implemented on January 4 on Metro Rail Transit (MRT) Line 3 and Light Rail Transit (LRT) Lines 1 and 2 commuters.

SC Spokesman Theodore Te said the magistrates, in their regular en banc session, decided to defer their action on the plea of the petitioners for the issuance of a temporary restraining order enjoining the fare increase until the respondents submitted their comments on the petition within 10 days.

Named respondents in the petitions are Transportation Secretary Joseph Emilio A. Abaya, Light Rail Transit Authority Administrator Honorito Chaneco, MRT 3 Officer in Charge Renato San Jose, and the MRT Corp. and the Light Rail Manila Consortium.

“The Court required respondents to submit their comment to the petitions and the application for a temporary restraining order within a period of 10 days from their receipt of notice,” the High Court said.

Four petitions have been filed questioning the legality of the fare increase that was approved by the

Megawide emerges top contender for ITS Southwest Terminal project

By Lorenz S. Marasigan

M

egawide Construction Corp. emerged as the front-runner in yet another auction for a multibillionpeso key infrastructure deal, offering to undertake the P2.5-billion Integrated Transport System (ITS) Southwest Terminal Project with the lowest government subsidy.

The company, which is a mainstay in the government’s publicprivate partnership (PPP) front, only sought for a P100-million annual grantor payment—simply put, subsidy—to win the deal.

The offer would mean that the government has to shell out P100 million annually for the rest of the 35-year concession period of the project.

Hence, the government will have paid an aggregate amount of P3.5 billion to the winning bidder after the concession period.

Rival Filinvest Land Inc., the only other party that submitted an offer for the deal, sought for a higher P650-million annual subsidy.

Transportation Spokesman Michael Arthur C. Sagcal explained that the grantor payment “is an annual fee that the government will pay for the services of the winning bidder.”

This is the first time that the transportation agency failed to

receive premium bids for a key infrastructure project.

Nevertheless, the government is satisfied with what it received during the auction, PPP Center Executive Director Cosette V. Canilao said.

“We are glad that at least two bidders submitted bids for this deal. Usually, if the bid parameter’s basis is the grantor payment, it’s very seldom that we will get a premium. We structured it already as availability payment because we know that we’re going to pay for the structure, based on our study,” she explained.

The transportation agency has 10 days to evaluate the offer submitted by Megawide’s MWM Terminals, but the government intends to fasttrack the review to award the deal as early as next week.

“We will expedite the evaluation process within the day [Tuesday] and hope to award soon,” Transportation Undersecretary Jose Perpetuo M. Lotilla said, explaining that the awarding of the deal would require the approval of the transport chief.

This is the second key infrastructure contract, in which Megawide and Filinvest clashed. The first one being the P17.5-billion Mactan-Cebu International Airport, a deal whose awarding was delayed because of legal hurdles.

Megawide won the battle for the

airport construction contract.

The multibillion-peso transport terminal contract, meanwhile, provides for the construction of an intermodal terminal near the Manila-Cavite Toll Expressway (Cavitex) to connect passengers coming from Cavite to urban transport systems in Metro Manila.

It will include a passenger terminal building, arrival and departure bays, public information systems, ticketing and baggage handling facilities and park-ride facilities.

The government has awarded eight contracts since the infrastructure program’s inception in 2010.

It aims to sign at least 15 contracts by the time President Aquino steps down from office in 2016.

Megawide has cemented its image as a mainstay in the government’s flagship infrastructure program, bagging a number of publicprivate partnership (PPP) projects, including, the P16.42-billion PPP for School Infrastructure Project Phase I; two of the five contracts under the P8.8-billion PSIP Phase II; and the P5.7-billion deal for the construction, operation and maintenance of the Philippine Orthopedic Center.

The state intends to plug the gap in the country’s transportation infrastructure in the next decade by rolling out massive infrastructure projects that are seen to spur economic growth.

Business survival in Davao City as high as 90%

By Manuel T. Cayon Mindanao Bureau Chief

D

AVAO CITY—Survival is high for entrepreneurs doing business here on their first year of operation, which range from 86 percent to 90 percent, the local investment promotion office said.

In December alone, the number of businesses that renewed their permits at the business bureau reached 33,052 which represent 86 percent already of the businesses that were registered last year.

“And we are still waiting for the January data of renewals, which are

Wednesday, January 14, 2015 A5

expected to increase the number of renewals to more than 90 percent,” said Ivan C. Cortes, acting chief of the City Investment Promotion Office.

The office equates renewals with survival because of the concept of continuity of business.

“During the last five years, survival of businesses on year-on-year basis averaged 80 percent, with 2014 already showing 86 percent,” he said.

Outsourcing companies have become the favorite newcomers here, and Cortes said that “they now consider the city the ideal

location for business-process outsourcing.”

Real estate and housing remained on top of the robust business operations, Cortes said, citing constructions all around the city.

While there was a decline in revenue in the last two years, Cortes said the income also stayed within the P6-billion mark. In 2013 the city earned P6.4 billion, and declined by P100 million to P6.299 billion by last year.

Value of businesses last year, based on capitalization, was P203 million, he added.

Department of Transportation and Communications (DOTC).

An increased base fare of P11 for both the LRT and the MRT, with an additional P1 charge for every kilometer, has been implemented starting on January 4.

The fare adjustments would jack up the fares of LRT 1 from Baclaran to Roosevelt stations and vice versa to P29 for a one-way trip from P12 and P15 at present; LRT 2 from Santolan to Recto stations and vice versa to P24 from about P20; and the MRT 3 from North Avenue to Taft Avenue stations and vice versa to P28 from P10 and P15 at present.

The petitioners refused to accept the government’s justification for the fare increases, saying that the LRT and MRT are “public services” and must be “subject to regulation, and their fare rate may not be adjusted unilaterally.”

“As public services, they are sub-

ject to regulation, not only as regards their route and the quality of service they offer to the public, but also as regards the manner of fixing the rate of fees that they impose for the use of their services,” the petitioners said.

The petitioners included Bagong Alyansang Makabayan (Bayan), former Rep. Augusto Syjuco Jr. of Iloilo, Party-list Rep. Neri Colmenares of Bayan Muna and United Filipino Consumers and Commuters last week questioning the legality of the recent fare increases in the LRT and the MRT.

GAA 2015

THE SC also dismissed two petitions filed by Syjuco seeking to invalidate the General Appropriations Act (GAA) for 2015 and Republic Act 10652, a law providing a supplemental budget for the national government.

Te said the magistrates decided to dismiss both petitions at the en banc session for lack of merit.

In his first petition, Syjuco argued that the 2015 National Expenditure Program (NEP) in the GAA contained pork-barrel funds, in contravention of the Court’s decision that declared unconstitutional the Priority Development Assistance Fund.

Syjuco further contends that the Grassroots Participatory Fund is a clone of the Disbursement Acceleration Program (DAP), which the Court also has declared unconstitutional.

He also questioned the definition of “savings” contained in the 2015 GAA. Under the Constitution, Syjuco

said the term savings refers to a surplus in budget after the completion or payment of a particular line item budget included in the general appropriations law.

Syjuco noted that if the money was never used in the first place, then it cannot be classified as savings.

Syjuco claimed that the respondents expanded the definition of savings in the NEP and 2015 General Appropriations Bill to allow the Executive branch to “whimsically and arbitrarily discontinue, stop or fail to begin the implementation of an approved PAP [program, activity or project] even in the early parts of the fiscal year to forcibly turn the appropriations for such into savings.”

Giving the term savings a new definition, according to the petitioner, contravenes the SC decision that declared unconstitutional the practices under the DAP. But, the Court dismissed the petition for being premature as it failed to allege any specific expenditure, fund release or any Executive Act, or issuance to the effect.

“Petitioner, suing as a taxpayer, has not claimed any injury to him or to taxpayers in general but has only posed hypothetical or feigned problems or mere academic questions,” the SC noted.

For Syjuco’s second petition on the supplemental budget, the Court ruled that Syjuco had not shown any substantial grounds to have the supplemental budget declared unconstitutional.

Opinion BusinessMirror

A6 Wednesday, January 14, 2015

editorial

Proposed income-tax revision meritorious

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HE proposal of the Tax Management Association of the Philippines (TMAP) to revamp the country’s individual income-tax schedule is meritorious and worth considering. It will do several things: (1) exempt incomes below P300,000 from taxation; (2) reduce the number of tax brackets; and (3) impose lower tax rates per bracket.

Point (1) is extremely necessary. On the average, minimum-wage workers in the National Capital Region (NCR) earn about P15,000 a month, or P195,000 a year, including the 13th-month pay. However you look at it, there is no way a family of five, with two children going to school, can live decently on that income. Those working outside of the NCR will be earning even less. Worst is the situation of poor people, who are mostly without visible means of support beyond peddling in the informal sector; their number has been increasing, their living conditions, by all accounts, deteriorating. To subject this section of the population to taxation is almost inhuman.

Point (2) is necessary for convenience both of the taxpayer and the government, making accomplishment and evaluation of the Income Tax Form easier.

It will minimize errors and reduce opportunities for cheating.

Point (3) is the heart of the matter. The proposal will reduce the maximum tax rate to 30 percent from the current 32 percent. While protests from highbracket taxpayers are understandable, their complaint that our tax rates are highest in the Asean region is not easily dismissible.

Since the marginal tax rates were laid down in the 1990s, the price index has more than quadrupled. This means that incomes that increased during the period by less than quadruple are, in effect, being taxed more now than previously; those that quadrupled stand more or less on the same ground; while those that more than quadrupled are taxed less.

The saying is true that the earning of the first million is the most difficult; earning succeeding millions easier; the highest millions easiest. In practice, the vast majority of the population never earns a first million much less a second. They remain in the same income bracket they were born into. On the other hand, if you are rich at the beginning, you become richer before you can say Kim Jacinto-Henares.

Speaking of Henares, she will be interested in only one question: What will this proposal do to government tax collection? Henares will, by instinct, oppose any decrease in tax rates on the thinking that it will result in a decrease in tax revenue. Will Henares be right?

We doubt it. Despite the quadrupling of prices, our real per-capita income has doubled—to $2,700—in the last 25 years. This explains why tax revenue has increased dramatically in this period. This is saying that Henares has nothing to fear. That the increase in tax revenue is likely to be plundered by our glorious legislators is another matter (which we cannot delve into here).

Let’s give the TMAP proposal the hearing that it deserves.

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Some questions from SSS members Susie G. Bugante

All About Social Security

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VER the last several months, I received some questions from members of the Social Security System (SSS) who are following this column. I decided to publish a few of them for the information of other members who might have similar questions.

Mrs. M. was abandoned by her husband, who cohabited with another woman. She wants to know if she is entitled to her husband’s retirement benefit, as she is the legal wife and her only child is already over 21 years of age and is married.

Answer: The retirement benefit is granted to a member who has earned entitlement to it, and his or her beneficiaries do not have a share in it. Also, the addition or de-

letion of beneficiaries is exclusively the choice or prerogative of the SSS member. However, in the event that the member dies, all benefit claims will undergo careful evaluation. A member’s primary beneficiaries, according to the Social Security law, are: n Dependent, legal spouse who has not remarried or cohabited and has no children with other partners. n Dependent children below 21 years old, unmarried, unemployed,

or incapacitated if older than 21.

If Mrs. M. meets the qualifying conditions as a dependent legal spouse, then she could be entitled to the survivorship pension.

Mr. S. would like to know why he was denied pension increases granted in May 1998, September 1999, September 2000, September 2006 and August 2007. He said he was only granted the 5-percent increase that took effect in June 2014.

Answer: In order to be entitled to pension increases, a member must already be a pensioner prior to the dates when said increases were granted. A check with SSS records shows that Mr. S. was granted his retirement pension only in February 2010, which means that he is not qualified to receive retroactively any of the increases mandated prior to the date of his retirement. Thus, he is only qualified to receive the 5percent increase given in June 2014.

Mr. O would like to know whether the 13th-month pension that he

America’s going to lose the oil-price war Leonid Bershidsky

BLOOMBERG VIEW

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HE financial debacle that has befallen Russia as the price of Brent crude dropped 50 percent in the last four months has overshadowed the one that potentially awaits the US shale industry in 2015. It’s time to heed it, because Saudi Arabia and other major Middle Eastern oil producers are unlikely to blink and cut output, and the price is now approaching a level where US production will begin shutting down.

Representatives of the leading members of the Organization of Petroleum Exporting Countries (Opec) have been saying for weeks they would not pump less oil no matter how low its price goes. Saudi Arabian Oil Minister Ali Al-Naimi has said even $20 per barrel wouldn’t trigger a change of heart. Initial reactions in the US were confident: US oil producers were resilient enough; they would keep producing even at very low sale prices because the marginal cost of pumping from existing wells was even lower; Opec would lose because its members’ social safety nets depends on the oil price; and anyway, Opec was dead.

That optimism was reminiscent of the cavalier Russian reaction at the beginning of the price slide: In October Russian President Vladimir Putin said “none of the serious players” was interested in an oil price below $80.

This complacency has taken Russia to the brink: On Friday Fitch downgraded its credit rating to a notch above junk, and it’ll probably go lower as the ruble continues to devalue in

line with the oil slump.

It’s generally a bad idea to act cocky in a price war. By definition, everybody is going to get hurt, and any victory can only be relative.

The winner is he who can take the most pain. My tentative bet, so far, is on the Saudis–and, though it might seem counterintuitive, the Russians.

For now, the only sign that US crude oil production may shrink is the falling number of operational oil rigs in the US It was down to 1,750 last week, 61 less than the week before and four less than a year ago.

Oil output, however, is still at a record level. In the week that ended on January 2, when the number of rigs also dropped, it reached 9.13 million barrels a day, more than ever before. Oil companies are only stopping production at their worst wells, which only produce a few barrels a day–at current prices, those wells aren’t worth the lease payments on the equipment.

Since nobody is cutting production, the price keeps going down;

today, Brent was at $48.27 per barrel and trends are still heading downward. All this will eventually have an impact.

According to a fresh analysis by Wood Mackenzie, “a Brent price of $40 a barrel or below would see producers shutting-in production at a level where there is a significant reduction in global oil supply. At $40 Brent, 1.5 million barrels per day is cash negative with the largest contribution coming from several oil sands projects in Canada, followed by the US and then Colombia.”

That doesn’t mean that once Brent hits $40—and that is the level Goldman Sachs now expects, after giving up on its forecast that Opec would blink—shale production will automatically drop by 1.5 million barrels per day. Many US frackers will keep pumping at a loss because they have debts to service: about $200 billion in total debt, comparable to the financing needs of Russia’s state energy companies.

The problem for US frackers is that it’s impossible to refinance those debts if you’re bleeding cash.

At some point, if prices stay low, the most leveraged of the companies will go belly up, and the more successful ones won’t be able to take them over because they will have neither the cash nor the investor confidence that would help them secure debt financing.

The insolvencies and lack of expansion will finally lead to output cuts. The US Energy Information Administration still predicts that US crude production will average 9.3 million barrels a day, 700,000 barrels a day more than in 2014. But if Brent goes to $40, that forecast

receives every December, on top of his regular pension, is being taxed because he observed it is always P500 less than his monthly pension.

Answer: No, SSS pensions are tax-free. What Mr. O is receiving is a disability pension, which means, aside from the basic monthly pension, there is a supplemental allowance of P500, which can be used as allowance for his caregiver or for his medicines. The supplemental allowance is not included in the 13thmonth pension, which is released every December and is composed of only the basic monthly pension.

For more information about the SSS and its programs, call its 24-hour call center at (632) 920-6446 to 55, Monday to Friday, or send an e-mail to member_relations@sss.gov.ph.

Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante.bmirror@ gmail.com.

goes out the window. It’s probably overoptimistic even now.

As for the Saudis and the United Arab Emirates, they will just keep pumping. They are countries, not businesses, and they cannot just close down shop and go home—they still have budgets to finance and no replacement for oil as a source of international reserves. Russia, the world’s third biggest oil producer after the US and Saudi Arabia, is much shakier than the Middle Eastern oil monarchies, but it’s in the same situation: Oil is its lifeblood.

This could be a bloody, prolonged battle with an uncertain outcome.

The oil price is rather inelastic to short-term changes in demand and supply. Its course this year will, therefore, be largely dictated by the news and the market’s reaction to it. A wave of bankruptcies in the US shale industry will probably drive it up because it will be perceived as a negative factor for supply. How high it will go, however, is unpredictable.

It may actually rise enough to enable consolidation in the US shale industry, giving it second wind and driving Opec countries, Russia, Mexico and Norway into greater difficulties—or it might just even out at a level that would make the US forget about its shale boom. That would have dire consequences for the US economic recovery.

It may be time for the US government to consider whether it wants to up the stakes in this price war by entering it as a sovereign country. That might mean bailing out or temporarily subsidizing the shale producers. After all, they are competing with states now, not with businesses like themselves.

Opinion BusinessMirror

opinion@businessmirror.com.ph

The Geopolitics of 17 very obscure minerals BLOOMBERG VIEW

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are earths aren’t the world’s sexiest commodity. The 17 elements are notoriously difficult to extract from the ground and have brazenly obscure names. (Don’t make the classic rookie mistake of confusing yttrium with yttribium.)

But what they lack in branding, they certainly make up for in utility and ubiquity: they’re essential to products as wide-ranging as wind turbines, smartphones, high-tech weapon systems, and even your fishing reel.

Although the United States was once a major supplier of rare earths, China has been the world’s primary source since the 1990s. And that makes them more than just a commodity; they’re a test of how China’s vast economic and diplomatic ambitions bear on one another. As recent events demonstrate, they’re also a window into understanding that, even in the face of obstacles, China won’t give them up so easily.

As recently as 2013 China provided 86 percent of the world’s rare earths supply and, especially over the past several years, Chinese officials have made no secret of their plans to use their accumulating monopoly power.

In 2009 a senior official in Inner Mongolia, home to China’s most productive rare earth mine, explained to Xinhua, the state newswire, that export controls on rare earths (dating back to 1999) were designed “to attract more Chinese and foreign investors into the region.” This was a message to companies the world over: if you want to ensure continued access to rare earths, you’d better relocate your factory to China.

Then, in September 2010, China abruptly blocked export of rare earths to Japan after Japan detained one of its fishermen caught in waters claimed by both countries. Only after he was released did the flow of rare earths start again. But for Japan and the US, two of its biggest and most vulnerable rare earth customers— and two of China’s biggest geopolitical rivals—the implication was clear: when it comes to rare earths, China saw no reason to separate economic goals from political ones. In the words of then-Secretary of State Hillary Clinton, China’s application of political pressure against Japan served as a “wake up call.”

In one sense, that call came too late. By 2011 several foreign users of rare earths had already relocated production to China, according to the New York Times. Meanwhile, fear and speculation served to drive up prices. For example, cerium—a rare earth often used in aluminum and iron alloys—rocketed from $6 per pound in 2008 to a record of $77 per pound in August 2011.

But the demand—both political and economic—for alternative sources of rare earths soon began to shift the market. Alternatives to Chinese rare earths quickly began cropping up, whether via recycling, new mines, alternative materials, or even smuggling. In July 2010, the Colorado-based Molycorp raised $393.8 million in an initial public offering, the proceeds of which went to reopening a rare earths mine it had closed the previous decade. For its part, Japan set a goal of securing 60 percent of its rare earth supply from outside of China by 2018.

By mid-2011, the combination of conservation, new mine, and alternative materials had produced a price crash from which the rare earth market has yet to recover completely. And this has forced China to change course: on New Year’s Day Beijing lifted the 15-year-old export controls on rare earth minerals, in accord with the World Trade Organization ruling.

But it would be naive to expect China to give up its mercantile aspirations without a fight. Indeed, rescinding the export quotas wasn’t

In 2009 a senior official in Inner Mongolia, home to China’s most productive rare earth mine, explained to Xinhua, the state newswire, that export controls on rare earths (dating back to 1999) were designed “to attract more Chinese and foreign investors into the region.” This was a message to companies the world over: if you want to ensure continued access to rare earths, you’d better relocate your factory to China. a very significant concession in the first place: demand has fallen off so significantly that the quotas had ceased to be an issue. During the first 11 months of 2014, for example, China exported 24,866 metric tons of rare earths—significantly less than the full-year quota of 30,611 tons. Thus, when the WTO ruled in March 2013 that China’s export controls on rare earths and other industrial metals violated its rules, China didn’t so much as complain.

Moreover, rather than abandoning its plans for rare earths, China has already moved onto its Plan B: consolidating the industry into two state-owned conglomerates.

The thought seems to be that consolidation will address one of the main problems in China’s domestic market: the proliferation of private mines and wildcatters who can and do supply smugglers.

This isn’t to suggest that the West should be lamenting the disappearance of these smaller mines—they tend to be especially destructive to the environment. But it seems pretty obvious that China’s decision-making in this case is motivated less by environmental concerns than a desire to maintain its monopoly power. “The move will help the country maintain its pricing power for rare earth products,” reported Caixin, a Chinese business magazine in August.

It’s an open question whether Chinese industrial policy can maintain the country’s rare earths primacy—and a return to high rare earth prices—via consolidation.

But, if their goal is to maintain the country’s geopolitical leverage, they probably don’t need to do anything at all. As the Wall Street Journal noted in December 2013, even if China doesn’t dominate rare earth mining, it continues to dominate rare earth processing (the dirty, dangerous, energy-intensive and expensive process of turning rare earths into something useful).

Even Molycorp, the company that was meant to be America’s great rare earths hope, sends some of its rare earths to China for processing, and that’s unlikely to change. The company, whose shares reached $77.54 in 2011, at the rare earth market peak, closed at $.60 on Friday. Unless there’s a dramatic change in rare earth prices in the near term, there’s no guarantee that Molycorp will even have enough cash to make it to the end of the year, much less build an expensive processing operation.

Either way, China’s new rare earth conglomerates—which enjoy statebacking to cover their losses—seem likely to continue their dominance for years to come.

A7

Collateral source rule does not apply to contracts of indemnity Dennis B. Funa

Adam Minter

Wednesday, January 14, 2015

INSURANCE FORUM

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he collateral source rule provides that “if an injured person receives compensation for his injuries from a source wholly independent of the tortfeasor, the payment should not be deducted from the damages which he would otherwise collect from the tortfeasor” (Black’s Law Dictionary, sixth edition).

A legal concept found in tort law, the Illinois Supreme Court has described the collateral source rule as “an established exception to the general rule that damages in negligence actions must be compensatory” (Wills v. Foster Jr., 229 Ill. 2d 393, 2008). The Rule does not allow the wrongdoer or the tortfeasor to benefit “from the expenditures made by the injured party or take advantage of contracts or other relations that may exist between the injured party and third persons” (Wills v. Foster). Thus, “the tortfeasor is required to bear the cost for the full value of his or her negligent conduct even if it results in a windfall for the innocent plaintiff” (Mitchell v. Haldar, 883 A.2d 32, 3738 [Del. 2005]).

In Mitsubishi Motors Philippines Salaried Employees Union v. Mitsubishi

Motors Philippines Corp. (MMPC) (G.R. 175773, June 17, 2013), the dispute was on whether an insured may recover from an insurance clause in a Collective Bargaining Agreement (CBA) the full amount of hospital bills that was already paid by a Health Maintenance Organization (HMO) or by an insurance company offering health insurance. The collateral source rule was invoked to justify a second recovery from the insurance clause of the CBA. The Supreme Court ruled that the collateral source rule intended “to place the responsibility for losses on the party causing them” (Erillo, Joseph M., The Collateral Source Rules in Contract Cases, 46 San Diego L. Rev. 705, 2009). Thus, the Rule has “no application to cases involving no-fault insurances under which the insured

is indemnified for losses by insurance companies, regardless of who was at fault in the incident generating the losses” (Black’s Law Dictionary).

Accordingly, the company obligated to provide health insurance under the CBA “cannot be obliged to pay the hospitalization expenses of the dependents of its employees which had already been paid by separate health insurance providers of said dependents.”

It was also noted that “the conditions set forth in the CBA provision indicate an intention to limit MMPC’s liability only to actual expenses incurred by the employees’ dependents, that is, excluding the amounts paid by dependents’ other health insurance providers.”

The Supreme Court furthermore added that the payment of amount already paid under other insurance policies would constitute double recovery which is not allowed under the law. Thus the Court explained: “Being in the nature of a nonlife insurance contract and essentially a contract of indemnity, the CBA provision obligates MMPC to indemnify the covered employees’ medical expenses incurred by their dependents but only up to the extent of the expenses actually incurred.

This is consistent with the principle of indemnity which proscribes the insured from recovering greater

Explaining how economists explain Mark Buchanan

BLOOMBERG VIEW

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HEN economists say they can “explain” something, beware: Their understanding of the word might be very different from yours.

Several years ago, in the immediate wake of the financial crisis, economist Ricardo Caballero wrote about what he called the “pretense-ofknowledge syndrome” in academia.

Economists, he argued, had become “so mesmerized” with the internal logic of their theories that much of the discipline—even that part concerned directly with policy making—had spiraled off into fantasy.

Even when they studied issues close to the crisis, such as bubbles, panics and fire sales, they relegated them to the periphery of macroeconomics, which at its core valued mathematical elegance over usefulness.

Not much has changed since then.

That, at least, is the conclusion of

Itzhak Gilboa and a group of economists who recently tried to understand why their profession operates so differently from most sciences.

Academic economists, they say, use the term “explanation” in a way that other scientists never would. Instead of developing realistic and testable theories like those in biology or physics, they often aim only to develop “theoretical cases”—imaginary mathematical worlds with their own rules of cause and effect.

Suppose, for example, that an economist wants to explain a persistent recession following a financial crisis. He or she may build a mathematical model in which companies and people are perfectly rational,

think far into the future and alter their investment and consumption only by choice—not in response to, say, unemployment or a credit freeze.

In such a world, deficit spending meant to create jobs would have no desirable effect: People would cut back in anticipation of the higher future taxes required to pay for the stimulus.

Needless to say, the usefulness of such a model for policy would depend on the extent to which it corresponded to reality. And yet, Gilboa and his colleagues suggest that most economists don’t see checking the external validity of models as part of their job. Rather, they like to make whatever assumptions are needed to prove their results, get published in a journal, and then “leave the similarity judgments to practitioners.” If their results are inappropriately applied in the real world, that’s not their problem. In no way does it threaten the reputation of the theories they have developed.

What’s disturbing is that most scientists would think that risking a theory’s reputation is at the core of good practice. Science isn’t just about making analogies, but about

than the loss. Indeed, to profit from a loss will lead to unjust enrichment and therefore should not be countenanced.”

In Philamcare Health Systems Inc. v.

Court of Appeals (G.R. 125678, March 18, 2002), the Supreme Court stated that a “health-care agreement was in the nature of nonlife insurance, which is primarily a contract of indemnity. Once the member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health- care provider must pay for the same to the extent agreed upon under the contract.” (citing Cha v.

Court of Appeals, 270 SCRA 690; see Blue Cross Healthcare Inc. v. Olivares, G.R. 169737, February 12, 2008).

However, seven years later, in Philippine Health Care Providers Inc. v. Commissioner of Internal Revenue (G. R. 167330, September 18, 2009, Resolution of a Motion for Reconsideration), the Court would categorically rule that HMOs are not engaged in the insurance business.

Against this backdrop, a clarification needs to be made on the nature of HMOs vis-à-vis the insurance business.

Atty. Dennis B. Funa is the Insurance Commission’s deputy commissioner for legal services. Send comments to dennisfuna@yahoo.com.

separating useful analogies from not-so-useful ones. False models are sources of confusion.

Unfortunately, all of this has real consequences. A few years ago, for example, economist George Akerlof observed that a number of theorems coming from the modern mathematical approach to macroeconomics appear to demonstrate remarkable things—that monetary policy should have no effect on economic output, for example, or that government spending can’t spur consumption. These conclusions rest on entirely unrealistic assumptions, as is common for “theoretical cases.”

Nonetheless, many economists still cite such theorems as if they should inform the government’s actions.

The work of Gilboa and his colleagues sheds a useful light on why economists seem so strange to other scientists: They really do expect far less from their explanations. Of course, building models with unrealistic assumptions can be a useful way to think about difficult problems and get closer to theories that better depict the real world. But it’s no way to design policies that affect the livelihoods of millions of people.