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Thursday, May 3, 2018 Vol. 12 No. 201
Lawmakers want stiffer fines for labor contractors
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By Butch Fernandez @butchfBM & Samuel P. Medenilla @sam_medenilla
tiffer penalties await errant employers under a bill up for plenary deliberation and approval by Congress outlawing endo, or end-of-contract scheme, the chairman of the Senate Committee on Labor confirmed on Wednesday. Sen. Joel Villanueva, committee chairman, told the BusinessMirror that the endo reform bill is set to be submitted for floor debates when the Senate reconvenes on May 15. “We expect to present our committee report [for plenary consideration] when we resume our sessions,” Villanueva said, indicating it would include sanctions against erring employers, as a deterrent. Asked to confirm if the com-
mittee report endorses stiff penalties for violators once the bill is enacted outlawing endo, the senator admitted it would include penal provisions against employers violating the law. “If Senate Bill 1116 will be enacted into law, job contractors who engage in labor-only contracting will be slapped with a fine of P1 million to P10 million, and their operations could be preventively or permanently suspended,” Villanueva said via SMS. The senator added: “If the job contractors fail to regularize their workers, they will have to pay indemnity and separation pay of P50,000 to each worker.” In a separate statement, Senate Minority Leader Franklin M. Drilon, a former labor secretary, suggested that “instead of railroading the process of amending the 1987 Constitution, Congress should prioritize the passage of measures to address the issue of endo, or labor-only contracting, expand health and social protection coverage, among others.” Sen. Francis G. Escudero also
Villanueva: “If Senate Bill 1116 will be enacted into law, job contractors who engage in laboronly contracting will be slapped with a fine of P1 million to P10 million.”
prodded the Senate and the House of Representatives to pass a law ending contractualization and strengthening workers’ security of tenure, following President Duterte’s Labor Day executive order (EO) prohibiting illegal contracting and subcontracting. In a separate statement, Escudero noted that “essentially, the Labor Code did not prohibit contractualization, but the Executive department can regulate it or prohibit it outright.” The Senator said the law gives the Executive department the choice. “Now the President, perhaps, wants to tell Congress: if lawmakers want to ban endo, just ban it and don’t pass it on to us.”
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Opportunities and risks in GVCs Dr. Rene E. Ofreneo
LABOREM EXERCENS
I
n 2017 the Department of Trade and Industry (DTI) released a policy brief promoting greater Philippine participation in the global value chains (GVCs) of the multinational corporations (MNCs). Accordingly, this will spur inclusive growth and create more and better jobs for Filipino workers. Obviously, the DTI is inspired by the growth performance of other Asian countries, notably China, under the GVC system. According to John West, an economist from ADB Institute, the GVCs account for around 80 percent of the goods traded in the world. The sustained increase of industrial jobs in China in the last four decades was partly a result of China’s high level of participation in the GVC system, such as the production and assembly of parts for the iPhone. Hence, the argument that the more a country is integrated into the GVC system, the more jobs it can generate for its labor force.
Continued on A2
See “Opportunities,” A12
‘MANUFACTURING SECTOR ADB has key role in PHL growth–experts TO REMAIN AS SOURCE OF STRENGTH OF ECONOMY’ By Cai U. Ordinario @cuo_bm
By Bianca Cuaresma @BcuaresmaBM
& Elijah Felice E. Rosales @alyasjah
T
he countr y’s manufacturing sector continued to expand in April on the back of strong consumer demand, based on the country’s Purchasing Managers’ Index (PMI) during the period. See “manufacturing,” A2
₧23.85B The amount of investment pledges in the manufacturing sector approved by the Board of Investments and the Philippine Economic Zone Authority in the first quarter
PESO exchange rates n US 51.7340
H
ALF a century ago, the “forces working for cooperation and fraternity between nations” were never underestimated. Fifty-one years later, they remain so, as the Asian Development Bank’s (ADB) unique engagement with the Philippines didn’t stop at the location of the multilateral bank’s headquarters. Continued on A2
The Asian Development Bank’s Board of Directors approved a $100-million loan for the Infrastructure Preparation and Innovation Facility, which will support the Philippine government in accelerating the delivery of high-quality public infrastructure projects under its ambitious “Build, Build, Build” program. www.adb.org
n japan 0.4709 n UK 70.4462 n HK 6.5910 n CHINA 8.1715 n singapore 38.8044 n australia 38.7436 n EU 62.0498 n SAUDI arabia 13.7950
Source: BSP (3 May 2018 )
BMReports BusinessMirror
A2 Thursday, May 3, 2018
ADB has key role in PHL growth–experts Continued from A1
It was in 1966, during the inauguration of the bank’s headquarters, that the late President Ferdinand E. Marcos saw “the beginning of a new era in the solidarity of the region.” Local experts believe that solidarity between the ADB and the Philippines helped the Southeast Asian nation become the “economic tiger” it is now by financing major projects. Since the 1970s, ADB’s financing was mainly for infrastructure projects, former dean of the University of the Philippines School of Labor and Industrial Relations (Solair) Rene E. Ofreneo said. “The tradition of the World Bank and the ADB in the 1970s onward was [financing] infrastructure projects,” Ofreneo said. “They financed dams, major national facilities, airports and then they also experimented on the original PPP [public-private partnership]; they introduced, in the 1970s and the 1980s, the term cofinancing.”
Conditional cash
THE ADB s a i d t h e P h i l i p p i n e s h a s been one of its largest borrowers. The Philippines has received a cumulative $16.85 billion worth of loans that covered 213 public projects and $82.6 million in grants covering 28 projects. In the past 10 years, the ADB’s annual lending to the Philippines reached $767 million. In 2017 the country was ranked as the seventh-largest borrower of the bank. “ADB’s support to the Philippines focuses on three main pillars: accelerating infrastructure investments, promoting local economic development, and increasing social investments,” the ADB said. However, while it may seem that ADB’s financing has been geared toward hard infrastructure projects, some believe the support of the bank in the Philippines has changed to include also financing soft projects. Former Finance Undersecretary Romeo L. Bernardo said one such project is the bank’s support for the Philippines’s conditional-cash transfer (CCT) program that, government officials believe, has helped the country close gaps in access to health and education services. The country’s CCT program, known locally as the Pantawid Pamilyang Pilipino Program (4Ps), started with 284,000 beneficiary households in 2008. By 2015, beneficiaries reached 4.1 million households. In terms of population, the number of beneficiaries rose from 662,000 children aged 0-18 years old in 2008 to 10.2 million in 2015. Today, the program covers about 79 percent of poor households whose income is less than the amount needed to basic necessities.
Disaster response
THE CCT extends a health grant amounting to P500 monthly year-round and an education
grant of P300 per child for 10 months each year to each participating household. To receive these cash grants, pregnant women must avail themselves of pre- and postnatal care, and be attended during childbirth by a trained professional and parents or guardians must attend the family development sessions, which include topics on responsible parenting, health and nutrition. Other conditions include children aged 0-5 must receive regular preventive health check-ups and vaccines; those aged 6-14 must receive deworming pills twice a year; and children between 3-18 must enroll in school, and maintain an attendance of at least 85 percent of class days every month. “The CCT program is already showing good early results in keeping kids in school and whittling down poverty rates,” Bernardo said. “[It] has been successful in several countries ahead of us.” Apart from the CCT, Bernardo also said the ADB is also now funding projects that support government efforts to respond to disasters, such as Supertyphoon Yolanda. The ADB extended $500 million as budgetary support to the Philippine government for Yolanda rehabilitation efforts and funded the $376-million Kalahi-Cidds project of the Department of Social Welfare and Development (DSWD). The Manila-based multilateral development bank also managed the $20-million Yolanda fund extended by the Japan Fund for Poverty Reduction (JFPR). The ADB also extended another $150 million worth of support for Yolanda efforts.
Most needed
APART from these, the Manila-based multilateral development bank has extended its infrastructure financing to project preparation for both private and public infrastructure projects. For public private partnerships (PPPs), the ADB helped create the Project Development Monitoring Fund (PDMF), the revolving fund supported by the ADB and the Australian and Canadian governments, only covers the procurement of transactional advisers, consultants and pre-feasibility studies. Recently, the bank also extended funding for the preparation of public projects through the $100-million Infrastructure Preparation and Innovation Facility (Ipif). The total cost of the facility is $164.06 million, with the government of the Philippines contributing $64.06 million. The project is expected to be completed in the second quarter of 2021. The list of projects that the facility can finance is about $3.8 billion. However, the indicative list from the national government includes seven roads and bridges; six water projects; and six transportation projects. Initially, the loan for the facility is good for five years but the Ipif can receive additional loans from ADB depending on the implementation of the projects and the need for additional resources by the national
government. “The TA on infrastructure [is] most needed as this administration ramps up spending, to ensure quality at entry. Address problems of thin pipeline, supplier-driven projects, poor FS [feasibility studies] [and] weak implementing agencies,” Bernardo said.
Business plan
THESE hopes and dreams are encapsulated in ADB’s new Country Operations Business Plan (COBP) covering the three-year period of 2018 to 2020, which will extend $3.68 billion worth of lending to the Philippines. The finance depar tment said the available funding for the Philippines’s infrastructure-related investments from 34 percent of actual lending approvals covering the 2011-2016 period to 48 percent over the next three years. It added it will also provide $1.9 billion for sustainable infrastructure and development, $1.2 billion for regional development and finance and $900 million for human development. ADB officials also assured the Philippine government of its support for the quick recovery and reconstruction efforts in Marawi City through its $225,000 technical assistance grant and another $5 million from the Bank’s Urban Resilience Fund. However, this COBP is being extended to 2022.
Gratitudes
PRESIDENT Duterte has thanked the ADB for its continued assistance to the Philippines, pointing out that the country has received around $16 billion from the bank in the form of loans and grants. Four Philippine projects in the financial sector were earlier completed with the help of Japanese funding from the ADB. These projects are:“Developing Microinsurance”(DM), “Capacity Development of Financial Regulators” (CDFR), “Capacity Building for Microinsurance” (CBM) and “Strengthening Treasury Operations and Capital Market Reform” (STOCMR). The DM project for the Philippines was approved by the ADB in February 2008 and was closed in July 2013. Sourced from the Japan Fund for Poverty Reduction, the $1-million project aimed to support a sound development of microinsurance as part of microfinance services to protect the poor from numerous contingencies and reduce severe poverty incidence. It had three components: review of the current insurance regulations and recommendation to make it more conducive to microinsurance development; enhance capacity of regulators and microinsurance providers through training and mentoring; and, formulation and conduct of a financial literacy program to increase access to microinsurance for the poor.
Strong Treasury ops
THE ADB approved in September 2014 the Philippines’s proposal for Strengthening Treasury Operations and Capital Market
Reform and provided technical assistance for the project. The total project cost was at $500,000 and also under cofinancing with the counterpart funding from the Philippine government at $100,000. The project aims to enhance the Bureau of the Treasury’s (BTr’s) debt and cash management functions, to strengthen its primary dealer system and enhance the development of the country’s capital market. In the 1990s ADB’s work in the Philippines focused on reform of the country’s public finances. The Philippines’s efforts in this area were rewarded with investment upgrades from international rating agencies.
Fresh deals
RECENTLY, Finance Secretary Carlos G. Dominguez III and ADB President Takehiko Nakao signed a $380-million loan agreement for the Improving Growth Corridors in Mindanao Road Sector Project (IGCMRSP). The two also led the official exchange of documents on the $300-million “Encouraging Investment through Capital Market Reforms” (EICMR) program-Subprogram 2. The first loan program involved the construction of about 280 kilometers of national primary, secondary and tertiary roads and bridges in the Zamboanga Peninsula and TawiTawi in Mindanao. Subprogram 2 is expected to accelerate investments in infrastructure by establishing a framework to diversify and broaden available funding sources, particularly private sector financing. Dominguez has said the loan would fund continuing capital market reforms in the country, which are “vital to encouraging investments in the economy and broadening public participation in the capital market.” The finance chief said implementing reforms in the country’s capital markets is expected to open new avenues for private investments in infrastructure.
Along federalism
ADB Philippines Office Country Specialist Joven Balbosa earlier told the B usinessM irror that the Manila-based multilateral development bank would launch the Regional Development Project for South Central Mindanao and the upcoming COBP. Balbosa said the new COBP will focus on regional development, consistent with the aim of the national government to pursue federalism. He said ADB is working together with local governments, particularly lagging regions, to help match them with leading regions which can help them increase investments in their locale. Indeed, the evolving engagement of the ADB and the Philippines mirrored the twists and turns of the country’s development in the past 51 years. One can only hope that the partnership between the Philippines and ADB will help even more Filipinos leave poverty in their past and make prosperity a reality in the present. With Rea Cu
Lawmakers want stiffer fines for labor contractors Continued From A1
Escudero added: “Essentially that’s what he [Duterte] is trying to do because as policy-makers, it is actually Congress’s job to determine the direction that any administration of the government should or will take.” At the same time, he said the Labor Code has been amended several times by Congress, but its existing provision on contractualization has not been touched. “So, perhaps, it is about time Congress indeed looks into it and decides once and for all whether it will be prohibited or we retain the
same regime we have had for the past 40 years,” the senator said. He noted that EO 51 issued by the President “may not have ended endo per se but provided certain rules and set off a policy direction along the line” which is a “big push to put an end to contractualization.” In fact, the senator said the government is “the biggest employer of contractual employees, both national and local.” According to Escudero, “the problem here is the government itself is the number one violator, “having hired the biggest number of contractual workers and job orders in the entire country.”
The senator suggested that the government should “lead by example and fix the problem of contractualization in the public sector first, before slamming the private sector.”
Restricting contractualization
The Federation of Free Workers said on Tuesday it is ready to engage the National Tripartite Industrial Peace Council (NTIPC) to limit occupations which could be contracted out. Federation of Free Workers (FFW) President Sonny Matula told the BusinessMirror via SMS that they are ready to block resolutions in the NTIPC from employers who want some occupations to be contracted out. “The FFW as a member of the NTIPC can use this provision to restrict [contractualization],” Matula said. “Regular work should not be contracted out.” Matula is referring to Section 2 of EO 51, which states that “the Secretary of Labor and Employment may, by appropriate issuances, in consultation with the National Tripartite Industrial Peace Council under Article 290 (c) of the Labor Code, as amended, declare activities which may be contracted out.” Matula, who is one of the NTIPC members, welcomed the provision since it will promote tripartism as a means to resolve issues related to contractualization.
The NTIPC is the tripartite body, which acts as the policy recommending arm of the Department of Labor and Employment (DOLE). Its members are comprised by business heads and labor leaders appointed by the President. Labor Undersecretary Joel B. Maglunsod said the current members of the NTIPC will be able to implement the provisions of EO 51. Matula, however, contradicted Maglunsod in saying President Duterte needs to reconstitute the council since many of its members are no longer active. Currently out of 20 representatives from labor groups in the NTIPC, only 14 are active. From the employer’s side, 17 of its 20 representative are active. Par tido Mang gagawa (PM) Chairman Renato Magtubo, however, said it is unlikely the provision in EO 51 for NTIPC will work in favor of workers. “In my opinion that power of the secretary to declare activities which may be contracted out became moot because in EO 51 the prohibition contained in title of Section 2 pertains only to illegal contracting or subcontracting practices. And these illegal practices are already defined by Article 106 [labor-only contracting] and DO [Department Order] 174 [cabo, in-house agency, etc.],” Magtubo said.
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Manufacturing Continued from A1
International think tank IHS Markit announced on Wednesday the sustained recovery of the Nikkei Philippines PMI for April this year, reaching 52.7 from 51.5 in March, making it the highest reading for the country thus far. The PMI is a composite index which gauges the health of the country’s manufacturing sector. It is calculated as a weighted average of 5 individual subcomponents. Readings above the 50 threshold signal growth in the manufacturing sector, while readings below 50 indicate a slow down. The report noted that the expansion of the manufacturing sector for the second consecutive month can be attributed to the “strengthening demand conditions” at the start of the second quarter. “Order book growth accelerated noticeably to a fourmonth high, which was accompanied by faster output expansion. As a result, Filipino goods producers raised employment levels and scaled up purchasing activity,” the report read. “Inventories also increased, though supply chains came under pressure. Optimism remained high, as did inflationary pressures,”it added. The firm’s principal economist Bernard Aw expressed optimism that the Philippine manufacturing sector started the second quarter on a robust note with growth in both output and new orders. “First-quarter manufacturing expansion was affected by the January rollout of the new excise taxes, but April data suggests that demand has since adjusted to these higher levies,” Aw said. “However, higher excise taxes continued to be felt through the pricing mechanism. While easing from the survey-record rate in March, input cost inflation remained elevated, not least because of a weak exchange rate, supply shortages and suppliers’ price hikes,” the economist added. He also said that in most cases, these firms were able to pass on some of the higher costs to their customers, but the
Failure. . .
Continued from A12
Dansal then announced the NFA’s reference price for rice imports. It is usually not announced ahead of the bidding day. The NFA computes its reference price a day or two before the bidding day based on the prevailing world market prices. An NFA official said they do this as to not preempt and influence the bid offers of the participating countries. The NFA’s reference price for the 15 percent brokens was at $483.63 per MT and $474.18 per MT for the 25 percent brokens. The reference price pertains to the maximum amount that the NFA would pay for the imports. Offers that go beyond the reference price are automatically thumbed down by the agency. The NFA will import 50,000 MT of 15 percent broken rice, while the remaining volume of 200,000 MT would consist of 25 percent brokens. “The average freight on board price was based on quoted world market prices as of April 25 from Thai Rice Exporters Association and Board of Trade of Thailand. Historically, these are the traditional sources of the world market price indicators for rice,” Dansal explained. She said the reference price also included “the incidental expenses which is comprised of 14 percent of total costs considering the actual submitted cost of the rice suppliers during the last G2G importation in 2016.” The NFA used the peso-dollar foreignexchange rate at P52.20 quoted on April 24. This means the maximum budget of NFA for the importation is around P6.19 billion, based on the computation of the B usiness M irror.
Failure of bidding
The offers made by Vietnam and Thailand were accepted by the CGGP and were turned over to the technical working group (TWG) to evaluate and check if they have complied with the needed requirements under the approved TOR. As both countries were declared compliant with the requirements, their offers were opened. Dansal first opened the sealed envelope containing the offer of Thailand. “There is no price offer for 15 percent brokens. For the 25 percent brokens, Thailand’s offer is $530 per MT which is not compliant with our reference price of $474.88,” she announced. Almost everyone in the room, including members of the media and the NFAC, were shocked by the offer of Thailand. One even remarked, “that’s too high!”
pressure on profit margins remains marked. The economist also believed that while prices are still on the rise, the local manufacturing sector will continue to be a source of strength in the coming months for the Philippine economy. “Overall, it’s clear that underlying demand has improved, partly supported by stronger export sales. With companies’ optimism remaining high, despite the dip in April, it looks likely that growth may well accelerate further in coming months,” Aw said.
Investment pledges
Investment pledges approved by the Board of Investments (BOI) and the Philippine Economic Zone Authority (Peza) expanded by 53.2 percent to P182.83 billion in the first quarter, from P119.31 billion in the same period last year. The BOI accounted for a hefty chunk of the investment pledges at 83.2 percent, or P152.12 billion, while 16.8 percent, or P30.72 billion, came from the Peza. Most of the investments were committed to electricity, gas, steam and air-conditioning supply sector at 57.1 percent, or P104.35 billion. Investments in this area ballooned by 2,074.5 percent from P4.80 billion year-onyear. Real-estate activities came in second with a 14.9-percent share at P27.24 billion, but dropped by 64.9 percent from P77.69 billion last year. Manufacturing accounted for P23.85 billion, or 13 percent. Investment pledges for the sector, however, were down by 19.64 percent from P29.58 billion. Japan was the country’s top source of foreign investments with P7.86 billion in the first quarter. The figure was 1,185.2 percent higher than the P610 million recorded in the same period last year. Investments from the United Kingdom, the second top foreign investor, declined by 57.5 percent to P1.54 billion, from P3.63 billion. Data from the Department of Trade and Industry showed that the Netherlands poured in P880 million; Singapore, P560 million; and the United States, P450 million. China’s investments grew by 71.1 percent to P410 million, from P240 million last year. Members of the Vietnam delegation kept a straight face while Dansal read their offer. “Vietnam has an offer 50,000 MT 15 percent brokens for $540 per MT,” Dansal paused. “This is not also compliant with the reference price of NFA, which is $483.63.” The observers chatted among themselves and said, “it’s too high! The increase was more than $60.” “The offers submitted are far beyond the reference price of the NFA. We are giving the chance to both governments to make a reoffer until 3 p.m. today [April 27],” Dansal said. But before the first round of bidding adjourned, Dansal asked the members of Vietnam and Thailand if they were willing to again make an offer. “Are you willing to do a reoffer Vietnam?” A member of the Vietnam delegation answered in the affirmative. When the Thai delegation was asked whether they will make another offer, one of the members signaled that they will have to make a phone call. The Thai representative immediately made a phone call while members of the Vietnamese delegation talked among themselves. According to some NFA officials, it could be a tactic by the participating countries to initially offer a high price just to know the reference price. After this, the participants will make a decision as to whether they would continue selling rice to the Philippines or just back out of the bidding. One observer even said that Thailand would back out due to the difference between the reference price and their initial offer, leaving Vietnam as the lone participant. However, at around 11:48 a.m. Thailand made another offer. At 12:17 p.m., Vietnam submitted its new offer. The CGGP opened the sealed envelopes at 12:19 p.m. “The revised offer from the government of Thailand is $520 per MT, which is not compliant with the reference price of $474.18 for 25 percent brokens,” Dansal announced. “Vietnam’s new offer of $530 per MT for 50,000 MT of 15 percent brokens is not also complaint with the reference price of NFA, which is $483.63,” she added. By this time observers murmured among themselves that the bidding process will fail. “For the 25 percent brokens, Vietnam offered to sell 100,000 MT at $521 per metric ton which is also way above the $474.18 as reference price of NFA,” Dansal said. She then announced, “Ladies and gentlemen, the bidding we had today is a failure for noncompliance with the reference price of the NFA. We will conduct a rebidding.”
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Editor: Vittorio V. Vitug • Thursday, May 3, 2018 A3
House members: Trash proposal for new Charter By Jovee Marie N. dela Cruz @joveemarie & Bernadette D. Nicolas @BNicolasBM
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embers of the House of Representatives on Wednesday asked the leadership of Congress and the Palace to junk the proposal to draft the new Constitution that would enable the country to shift to a federal form of government. L aw ma kers made separate statements as the recent Pulse Survey showed that 64 percent of Filipinos are against Charter change (Cha-cha). Party-list Rep. Carlos Isagani T. Zarate of Bayan Muna said the latest Pulse Asia survey, indicating that 64 percent of Filipinos are against Chacha, truly reflects the people’s consistent strong sentiment ever since the Ramos administration. “This shows that the present Cha-cha project of the Duterte administration would be met also by massive opposition and protests by the people. This Constitution tinkering project is just a waste of time and people’s money,” Zarate said. “What the Filipino people need now are land to the farmers, national industrialization, higher wages, an end to job contractualization and lower prices of goods. Cha-cha will not provide this, as in fact it will usher the sellout of our national patrimony, the further entrenchment of dynastic politics and the resurgence of tyranny in our country,” he added. Zarate said it would be better for the Duterte administration and its
64% The indicative percentage of Filipinos who are against Charter change as shown by a recent survey
allies in Congress to listen to the sentiments of the people and drop this “anti-people” Cha-cha project.
Lot of work to be done
Both Malacañang and the consultative committee (Con-com) tasked to review the 1987 Constitution conceded that there is still “a lot of work to be done” to inform the public on constitutional reforms. Presidential Spokesman Harry L. Roque Jr. said they are taking note of the recent Pulse Asia survey results, including the Filipinos’ awareness on Cha-cha proposals. “The Duterte administration is,
thus, working tirelessly in promoting to the public the workings of a federal setup, a campaign promise of the President to bring the government closer to the people,” Roque said in a statement. The Con-com, in a separate statement, said that in all the surveys, people have also understandably shown limited knowledge of the 1987 Constitution. “Given that condition, it is not likely that they would readily approve of changing something that they need to understand first,” the statement read. Con-com Chairman and former Chief Justice Reynato S. Puno also said in a separate statement that the latest survey was taken at a time when the Committee is still formulating the proposed provisions. “Once we are done and the proposed revisions are presented to the public, we are confident that the public perception will change. Ultimately, the true pulse of the people will be felt and shown when the plebiscite is held for the people to decide whether or not they want a new constitution and a new system of government,” Puno said.
Cure-all formula?
PARTY-LIST Rep. Tom S. Villarin of Akbayan also said the growing opposition of two third of Filipinos against Cha-cha is solid proof that Filipinos reject the administration’s narrative that federalism is the cure-all formula for our country’s ills. “Only 23 percent support a shift, probably most of them his core supporters lured by their fake news and ‘change scamming’ schemes. Even the much-vaunted federalism campaign has not reached half of the population with only a 49-percent
awareness rate. This also reinforces surveys showing that 73 percent of Filipinos have not read the 1987 Constitution,” Villarin said. “It’s high time that President Duterte focus on governing rather than trifling with our Constitution and rule of law,” he added. Earlier, Speaker Pantaleon D. Alvarez said the leadership of the House of Representatives will have to wait for the inputs of the Presidential Con-com before proceeding to draft the new Constitution. The planned shift to federalism is the main advocacy of PDPLaban members in Congress. It is also one of the main campaign promises of Duterte. For his part, Rep. Edgar R. Erice of the Second District of Caloocan said the Pulse Asia survey shows a very clear indication that a vast majority of the Filipino people finds it unacceptable to change. “I acknowledge that there are some provisions in our Constitution that must be changed or improved, such as the manner of implementing its anti-political dynasty provision and the multiparty system, I suspect that the people do not trust the prime movers of the Cha-cha, especially those in Congress,” he said. “The ulterior motives of those pushing for it is quite obvious to the people. The term extension, no election scenario and the fact that a new Constitution may give in to slow China to directly exploit our natural resources in the WPS [West Philippine Sea] are issues that would raise eyebrows,” he added. According to Erice, a constitutional convention is the only “viable venue where we can come up with a well-studied Constitution.” Meanwhile, Part-list Rep. Gary
C. Alejano of Magdalo said the survey results only show that people have doubts on the real intention of the proponents in amending the Constitution. “This is compounded by the lack of education on the contents of the proposed federal Constitution. The proponents do not even have a common draft to start with,” he added.
What to do
Rep. Luis Raymund F. Villafuerte Jr. of the Second District of Camarines Sur urged Congress to start the information campaign on the proposed shift to a federal system to educate the public about the advantages and benefits of this system. Villafuerte pressed the need for an information campaign as the Con-com already voted in favor of a United States-style presidential form of federal government. The lawmaker said he also favors this type of federalism, saying it “is the best for the country, as the government is already familiar with this setup and can easily identify which areas require improvements.” “The information campaign on federalism should start now so that the government would have enough time to educate the people about how this progressive form of government would be most beneficial for them, in terms of spreading the country’s economic gains to the countryside and raising rural incomes,” Villafuerte said. He added “our local officials, who are the frontliners in delivering government services to the people, are in the best position to help Filipinos understand why we need to shift to federalism as a way of transforming our society into a truly inclusive one,
in which no one gets left behind in our pursuit of prosperity.” Villafuerte said the switch to a federal setup is the sure-fire way to attain President Duterte’s goal of ensuring equitable regional growth and countryside development under his zero to 10-point socioeconomic agenda. Meanwhile, Alvarez on Wednesday said the push for federalism type of government would empower regions and spur economic growth and social development across the country. Alvarez reminded the public after the results of Pulse Asia survey showed that, while half of all Filipinos are aware of Cha-cha efforts, only one in four favors it at present. “Our advocacy of the federal system is anchored on our firm belief that by giving the regions greater leeway in terms of powers and resources, we can unleash their potential to contribute to over all economic growth and social development for the long term,” Alvarez said. Alvarez, however, added that there’s need for the entire national government to intensify efforts at explaining to the Filipino people the need to revise the 1987 Constitution and the proposed shift to a federal system of government. “The survey, finding that 3 out of every 4 Filipinos, or 75 percent, have little/almost none/no knowledge at all about the 1987 Philippine Constitution tells us very clearly that we must come together and intensify the information, education and communication campaigns throughout the country to tell our people that we must revise the three-decade-old Constitution to make it responsive to changing times,” Alvarez said.
Civil-society groups defend Sereno ahead of SC quo warranto decision against her Navy arms three attack By Joel R. San Juan
@jrsanjuan1573
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EVERAL civil-society groups have called on the Supreme Court (SC) to junk the quo warranto petition filed by the Office of the Solicitor General seeking to invalidate the appointment of Chief Justice Maria Lourdes A. Sereno as the country’s top magistrate. Solicitor General Jose C. Calida filed the petition seeking to nullify Sereno’s appointment, citing her alleged failure to fully disclose her wealth before applying for the top SC post in 2012 following the ouster of Chief Justice Renato Corona due to unexplained wealth. Calida said Sereno failed to comply with the requirement set by the Judicial and Bar Council, which is the submission of Statement of Assets, Liabilities and Net Worth. In a manifesto published in a major daily, the signatories representing the broadest multisectoral spectrum of prodemocracy groups in the country said that granting the quo warranto petition filed by Calida would be “illegal” and “a betrayal of democracy.” Among the signatories were wellknown political figures in the opposition such as former Vice President Teofisto Guingona, incumbent Sens. Francis N. Pangilinan and Antonio F. Trillanes IV, former Sen. Rene Saguisag, Party-list Rep. Gary C. Alejano of Magdalo, former Social Welfare Secretary Judy Taguiwalo, former Commission on Human Rights Chairman Etta Rosales, former Presidential Adviser
on the Peace Process Teresita Quintos Deles, former Civil Service Commission Chairman Karina Constantino-David and members of the Makabayan bloc in Congress. The manifesto was also signed by National Artists Bienvenido Lumbera and Benedicto Cabrera, former lawmakers, movie directors and writers, Coalition for Justice lead convener Pastor Caloy Dino, Cagayan de Oro Archbishop Antonio Ledesma, running priest Fr. Robert Reyes and other leaders of religious organizations and the civil society. The groups claimed that the “Supreme Court trampled on the Philippine Constitution and betrayed its primary duty to the Filipino people when it violated Sereno’s right to due process” by allowing five “biased” associate justices to participate in the case. The justices, who were earlier asked by Sereno to inhibit from the case but denied the same were Associate Justices Teresita Leonardo de Castro, Diosdado Peralta, Lucas Bersamin, Francis Jardeleza and Noel Tijam. “If the Biased 5 will not inhibit, then we call on them to resign. The people will not accept any decision tainted by gross injustice and Justices who cannot act with justice,” the signatories said. The manifesto cited several instances where the five magistrates violated the Code of Judicial Conduct, which every member of the judiciary is duty bound to follow. “The Judiciary’s Code of Conduct
decrees resistance against attempts to subvert judicial independence. The five Justices bowed to Congress’s impeachment summons,” they said. The signatories also lambasted the five justices for attacking Sereno in a proceeding that disregarded her constitutionally guaranteed right to counsel and right to cross-examine the witnesses against her. The SC is set to render its judgment on the quo warranto case during a special en banc session on May 11 or three days before Congress resumes session with the House expected to tackle Sereno’s impeachment case in plenary. This developed as two staff members of Sereno on Wednesday asked the Department of Justice to dismiss the graft complaint filed against them in March by lawyer Lorenzo Gadon for lack of probable cause. Gadon, the complainant in the impeachment case against Sereno before the House of Representatives, accused her staff head Ma. Lourdes Oliveros and staff member Atty. Michael Ocampo of violating Republic Act 3019 (Anti-Graft and Corrupt Practices Act) and also R.A. 9184 (Government Procurement Reform Act). Gadon filed the complaint in connection with the alleged anomaly in the hiring of former information-technology consultant Helen Perez-Macasaet by Sereno’s office—one of the grounds in the impeachment case against the Chief Justice. He specifically accused Oliveros and Ocampo, for their part, of “manifest
partiality, evident bad faith or gross inexcusable negligence” in the performance of their administrative duties. The complainant alleged that only two of the eight contracts of service of Perez-Macasaet to the SC passed the Bids and Awards Committee while the six others were renewed by Sereno without the knowledge and approval of the BAC. “The splitting of the contracts was meant to evade competitive bidding in violation of RA 9184. The mode of hiring of respondent Perez-Macasaet was a form of negotiated procurement through direct negotiation instead of undergoing public bidding,” he stated. Gadon also questioned Perez-Macasaet’s compensation, which was P100,000 a month under the first contract and P250,000 a month in the succeeding contracts, saying it was “way beyond” the compensation ceiling set by a circular letter from the Department of Budget and Management. “By reason of compensation alone, the contracts of service of Perez-Macasaet, upon the recommendation and influence of respondents Oliveros and Ocampo, are manifestly and grossly disadvantageous to the government,” he said. Oliveros and Ocampo submitted their counter-affidavits before Assistant State Prosecutor Gilmari Fe Pacamara who was assigned to conduct a preliminary hearing on the case. Perez-Macasaet was also named respondent in the complaint, but she is set to submit her counter-affidavit in the next hearing set for May 9.
ships with Israeli missiles By Rene Acosta
@reneacostaBM
I
sraeli-made missile systems are already being fitted on the three latest generation of multipurpose attack craft (MPAC) that are in the inventory of the Philippine Navy. The installation of Rafael Advanced Defense Systems SpikeER (Extended Range) missile systems on the three Mark III small attack vessels was made almost a year after they were delivered to the Navy. A Navy official, who confirmed the report on Wednesday, said the installation of the Israeli missile systems, began two weeks ago, with the works may be taking some more weeks. “If you are missile-firing with extended range, it is like you have a punch already, whether your target is a small ship or a big ship,” the official, who asked not to be named, said. The official’s unit hosts the attack craft where the weapons systems are being mounted, and whose negotiations with Israeli officials began last year. The three MPAC were built and delivered to the Navy in May last year by the Subic Bay-based Propmech Corp. at the cost of P270 million. The three attack vessels, with hull numbers BA-488, BA-489 and BA-490, joined the older version of six Mark I and II MPAC that are currently in the service of the Navy. The installation of the Rafael missile systems had been a little bit late since the works should have began last December, as earlier disclosed by retired Navy chief Vice Admiral Joseph Mercado. The weapons are on anti-ship mode or can engage surface vessel targets, and are capable of penetrating 1,000 millimeter (39 inches) of rolled homogeneous armor and have a maximum range of five miles. As designed, the three MPAC are at least 17 meters long with a cruising speed of 40 knots and a maximum speed of 45 knots. They are armed with light and heavy machineguns and could store 10 canisters of surface-to-surface missiles.
Faeldon, ex-BOC officials not yet off the hook in ₧6.4-B shabu smuggle case
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he Office of the OmbudsmanSpecial Panel of Fact-Finding Investigators has recommended the filing of criminal charges against former Bureau of Customs (BOC) Commissioner Nicanor E. Faeldon and several officials in connection with the smuggling of 602.2 kilograms of high-grade methamphetamine hydrochloride, or shabu. This after the office has complet-
ed the fact-finding investigation on the complaint involving the smuggling of shabu with an estimated street value of P6.4 billion. The criminal and administrative charges will undergo preliminary investigation and administrative adjudication, respectively, the Office of the Ombudsman said in a news statement. However, complaints against the President’s son and son-in-law former
Davao City Vice Mayor Paolo Duterte and Atty. Manases Carpio, respectively, were dismissed for lack of basis. During a Senate investigation Customs broker Mark Taguba tagged the vice mayor and Carpio as “influence peddlers.” However, the two denied the allegations. Facing criminal charges for violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act (Republic Act 3019), are Faeldon, Import
Assessment Service Director Milo Maestrecampo, Risk Management Office Chief Larribert Hilario and Accounts Management Office Chief Mary Grace Tecson-Malabed. The panel also recommended the filing of administrative charges of grave misconduct against Faeldon and BOC officials Joel Pinawin and Oliver Valiente, as well as gross neglect of duty and grave misconduct against
Tecson-Malabed and Maestrecampo. It recommended the filing of additional charges of usurpation of official functions (Article 177 of the Revised Penal Code), violation of Section 32 of the Comprehensive Dangerous Drugs Act of 2002 (RA 9165) against Faeldon, and violation of Section 3(a) of RA 3019 against Faeldon and BOC Director Neil Anthony Estrella. On May 26, 2017 joint operatives
from the BOC-Customs Intelligence and Investigative Services, the National Bureau of Investigation, the Philippine Drug Enforcement Agency conducted a raid on a warehouse owned by the Philippine Hongfei Logistics Group of Cos. Inc. in Valenzuela City. The raid involved the controlled delivery of a shipment declared to contain printing cylinders.
Jovee Marie N. dela Cruz
Economy
A4 Thursday, May 3, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon
BusinessMirror
BOC’s Lapeña gives glimpse on PHL Customs revenue loss By Manuel T. Cayon
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@awimailbox Mindanao Bureau Chief
AVAO CITY—Undervaluation of goods due to the longtime practice of benchmarking, tara system, connivance among Bureau of Customs (BOC) officials, staff, traders and businessmen are among the main culprits that contribute to the lowerthan-expected Customs revenues. Customs Commissioner Ret. Police General Isidro S. Lapeña, in an interview with the BusinessMirror, has admitted that due to these illegal practices, about “two-thirds,” or roughly 66.67 percent, of realizable revenue is “lost.” Lapeña said he discovered some methods used to estimate collectible taxes that skip actual examination and valuation. He cited the so-called benchmarking to estimate taxes to be collected for each container van of shipment. Lapeña said when he took over the Customs post, the benchmark for each container van is P40,000. This poses a problem
2/3 or roughly 66.67 percent The estimated Customs revenue loss on a regular basis since what if “the van would contain goods amounting to P1 million, for example.” “By the value-added tax alone, at 12 percent, we would easily have P120,000...so two-thirds is lost here,” Lapeña said. Lapeña also disclosed that the Trade Counsellor of China, dur-
ing his recent visit at the BOC, has stated that the value of goods leaving China reguarly shipped to the Philippines is about $42 billion on a regular basis. But when the same shipment of goods reach the Philippines, however, the value of the same goods diminishes to only $18 billion. This, he added, means that “there is undervaluation.” Lapeña admitted that “the dynamics, the anatomy of corruption, the tara system [inside the BOC] and because of the slow processes in the Bureau of Customs,” businessmen are forced “to look for someone who can help them facilitate their goods, of course for a certain fee.” He noted that the government is the loser in this collusion practice where “shady fees” change hands, as these are “not taken from the own profit of the businessman, nor from the compensation due the brokers. They get it from the revenues.” Lapeña disclosed that smugglers are usually the same legitimate traders and businessmen, “ but who become smug g lers [themselves] when they resort to shady transactions.” Last Friday Customs agents raided the stores of some tenants of the DCLA mall along the Chinatown area of this city after test buys confirmed the sale in the market
of counterfeit beauty-care products. Agents estimated the value of the counterfeit beauty products at P50 million. “This is the thing that we want to address, and the short-term doables we have applied have turned out good results,” Lapeña said. The raid last Friday was among the many operations the BOC has been conducting nationwide to remind businessmen to conduct their business the legal way. Also, the cleansing within the BOC has allowed the agency to post “positive and all-time high collections in the history of the bureau.” This year the Customs chief is confident the BOC would be able to reach its target of P598 billion after it hit its target monthly collection for February and March, commonly the difficult months to achieve the target due to the twoweek Chinese New Year celebration when there are no transactions in China. Further, February has also the fewest number of days in the year. Lapeña also noted that March is another challenging month due to the spillover effect of the inventory period beginning January and toward February. The tax-collection target of the agency this year is P130 billion more than its target last year of P468 billion.
Group to ADB: Stop funding coal plant projects By Elijah Felice E. Rosales @alyasjah
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N umbrella group of economic and environmental activists is pressing the Asian Development Bank (ADB) to stop funding coal and fossil-fuel power plants, and to instead spearhead the creation of a framework toward a carbon-less economy. In a news briefing on Wednesday, the Asian Peoples’ Movement on Debt and Development (APMMD) and Piglas Pilipinas expressed their disappointment over the Japanbased multinational financial institution for continuing to bankroll coal projects in the Asia Pacific. According to the groups, this is in spite of the ADB’s commitment to back cleanenergy investments. “While the Asian Development Bank likes to portray itself as a champion of clean energy, committing $2 billion a year to clean-energy investments, it still continues to support coal-based power projects,” the groups said in a news statement. They also claimed the ADB’s total financing for coal projects reached $10.74 billion from 2009 to 2017. Sreedrar Ramamurthi of the APMMD reminded the ADB to look at its antipoverty mandate and take into account the lives that will be put in danger by the coal infrastructure. She also said the ADB must veer from its previous frameworks in crafting Strategy 2030, the bank’s long-term plan for its member-countries. “We call on the ADB to stop financing coal-fired power plants and move in the direction of phasing out fossil fuel use,” Ramamurthi said. She shared their call will be made known to the ADB in its consultations with civil-society organizations this week at the 51st ADB Annual Meeting here in Manila. The groups cited as examples the Korea Electric Power Corp.’s 200-megawatt (MW) coal-fired power plant in Cebu and the Masinloc Power Partners Ltd.’s 600-MW coalfired thermal power plant in Zambales. The ADB threw in $120 million in the Cebu project, while putting in $200 million in the Zambales plant.
www.businessmirror.com.ph
Bello sets Kuwait trip for signing of new OFW deployment pact By Samuel P. Medenilla @sam_medenilla
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abor Secretary Silvestre H. Bello III is optimistic that Kuwait will be amenable to the provisions of a draft memorandum of understanding (MOU) with the Philippines that has been scheduled for signing during an upcoming trip of a Philippine delegation to the Gulf Arab state. In a radio interview, Bello said the Kuwaiti officials are still eager to continue talks on the proposed accord. So far, he said, the Kuwaiti government has not voiced out any opposition on the provisions of the agreement, including requiring overseas Filipino workers (OFWs) in Kuwait to deposit their passports to the Philippine Embassy. “They are open to it to prevent employers from confiscating the passports [of our OFWs],” Bello said in the radio interview on Wednesday. He added he is now just awaiting for the necessary clearance to head to Kuwait During the weekend, Bello said he is expected to arrive in Kuwait on May 7 for the negotiations of the MOU. “I will be meeting with my counterpart, the Minister of Labor, as well as the ministers of foreign affairs, interior and their ambassador,” Bello said. The signing of the MOU and giving justice for the gruesome death of Filipino household service worker (HSW) Joanna Demafelis are the two conditions given by President Duterte to lift the existing deployment ban to Kuwait. Duterte ordered the issuance of the ban in Kuwait after Demafelis’s remains were found in February stuffed in a freezer inside the home of her employer. Bello, likewise, said he had also arrange for the release of a detained Philippine embassy personnel in Kuwait. “We will go to them so they could be released,” Bello said. Some Philippine embassy per-
sonnel were arrested by Kuwaiti authorities last month for their controversial rescue of distressed Filipino HSWs. The incident irked Kuwaiti authorities and resulted to the expulsion of Philippine Ambassador to Kuwait Renato Villa. On Tuesday Kuwaiti Deputy Foreign Minister Khaled Al-Jarallah reaffirmed their country’s friendship with the Philippines. He said they hope both countries will be able to overcome their existing disagreement. The Department of Foreign Affair (DFA) welcomed the gesture as sign of the country’s improving diplomatic relations with Kuwait.
Qatar ‘freeze’
The Philippine Overseas Employment Administration (POEA), meanwhile, has imposed a new set of deployment restrictions to Qatar, amid a reported hike of an OFW who suffered employment contract violations. In its Advisory 21, series of 2018, POEA Administrator Bernard P. Olalia suspended the verification and processing of recruitment documents of OFWs, who will be working in Qatari firms engaged in manpower/labor supply; cleaning and hospitality; and outsourcing and subcontracting. However, he noted that OFWs whose documents were already verified by the Philippine Overseas Labor Office (Polo) prior to the effectivity of the new issuance will be exempted from the suspension. Olalia issued Advisory 21 on March 27, 2017, after the Polo and Philippine Embassy reported the “mounting complaints” of employment contract violations in the said sectors. “ The reported employment violations include nonpayment and underpayment of monthly salaries and benefits, illegal termination, substitution of contracts and maltreatment, among others,” Olalia said.
Purisima, FEF support Duterte admin’s tax-reform program By Rea Cu
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@ReaCuBM
ormer Finance Secretary Cesar V. Purisima has expressed his full support on the proposal of the Department of Finance (DOF) to modernize incentives for businesses and reduce the corporate income-tax (CIT) rate to improve the collection efficiency of revenue agencies, as he underscored the necessity of instituting long-overdue reforms in the corporate-tax system to bolster the country’s competitiveness. The DOF also announced that Purisima congratulated his successor, Finance Secretary Carlos G. Dominguez III, for the enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) law, the first package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP). “I am happy to see the credit watchers have noted the decisiveness with which the government, with your leadership, further strengthened our fiscal base in preparation for a surge of public investments. I wish you even more success as you shepherd the passage of Package 2,” Purisima said in his letter to Dominguez dated April 17. Package 2 of the CTRP aims to lower CIT rates, while modernizing investment incentives to level the playing field for 95 percent of business enterprises in the country. It is now pending in the House of Representatives. “While corporate income-tax rates are relatively high in the Philippines, tax efficiency is quite low. Thus, lowering rates while expanding the tax base and improving [through simplifying] compliance is indeed the best way to address this challenge,” Purisima said, who is now the Asia fellow for
the California-based economic think tank Milken Institute. The reforms proposed by the DOF under Dominguez’s leadership, the former finance chief under the Aquino administration, said “have been a longtime coming, and are critical for the country to bolster our competitiveness.” Purisima added he was expressing on record his “full support for the administration’s efforts to make the tax system fairer, simpler and more efficient.” “The DOF’s proposals for Package 2 come from a sound understanding of our remaining constraints to growth and a reasoned judgment on what needs to be done to overcome them,” he added. Meanwhile, the Foundation for Economic Freedom (FEF) has also expressed its support for the rationalization of fiscal incentives under Package 2 of the DOF’s CTRP. The FEF commended the proposal to link incentives to performance, and to limit the focus of incentives to sectors that will generate economic benefits such as employment, exports, among others. The FEF added that it supports the measures including, the phasing out of all existing incentives except for a subset of companies which are employment-intensive, and are likely to move to other countries without incentives; granting of new incentives outside of this small subset, which will be centralized in an Economic Development and Fiscal Incentives Review Board; phasing out of incentives for redundant investment; and accompanying Package 2 with administrative reforms that will improve the professionalism, efficiency and accountability of taxing authorities. With Elijah Felice E. Rosales
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TheBroa
Business
Thursday, May 3, 2018
By Jonathan L. Mayuga & Bernadette D. Nicolas
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EFORE President Duterte’s plane soared to the sky and beamed toward China, he was thinking of Boracay. In fact, the Chief Executive expressed his thoughts on putting the world-famous beach destination under agrarian reform. The President’s pronouncement prompted officials of the Department of Agrarian Reform (DAR) to immediately look into the island’s land classification for purpose of land distribution under Republic Act 6657, specifically, the Comprehensive Agrarian Reform Program (CARP), as amended by Republic Act 9007, or the Comprehensive Agrarian Reform Program Extension with Reform (CARPer). The pollution-challenged Boracay Island in the Municipality of Malay, Aklan, is a world-renowned tourist destination that was recently ordered closed to tourism activities for six months. The closure, which started on April 26, is expected to fast-track rehabilitation and to allow the island’s degraded environment to recuperate. Being a public statement coming from the highest official of the land, the President’s public pronouncement and the idea of placing Boracay Island under CARP have generated a lot of questions. The main question is: Could Boracay be placed under Carp?
To CARP or not to CARP
BORACAY’S land currently has two classifications by virtue of Presidential Proclamation 1064 signed in 2006 by then President and now Pampanga Representative Gloria Macapagal-Arroyo. Proclamation 1064 declared 628.96 hectares of Boracay Island’s total 1,006.64-hectare land area as agricultural land, hence alienable and disposable, and the remaining 377.68 hectares forest lands for protection purposes. The legality of Proclamation 1064 was affirmed by a Supreme Court decision, invalidating all existing land ownership claims prior to the proclamation, in effect declaring the entire island as state-owned. This decision from the High Tribunal affirmed Proclamation 1064 issued by Arroyo, classifying Boracay Island as both a forestland, which is for “protection purposes,” and an agricultural land, which is “alienable and disposable.” The case for the Court decision stemmed from the petitions filed by two groups of resort owners. The decision underscored that the private claimants failed to prove the first element of continuous, exclusive and notorious possession of their lands on Boracay since June 12, 1945. Castriciones explained that those classified as “alienable and disposable” can be distributed to farmer beneficiaries.
Forest lands
ACCORDING to the Provincial Environment and Natural Resources Office (Penro) of Aklan, Boracay only has natural forest, which means there is no production forest or tree plantation on the island. Boracay Island is comprised of three barangays—Manoc-Manoc, Balbag and Yapak. It is within the Municipality of Malay, one of the 17 towns that comprise the Province of Aklan. Being partly an agricultural land, part of Boracay can technically be covered by Carp, according to officials of the Department of Agrarian Reform (DAR). DAR is the lead implementing agency of the law that gave birth to the first Aquino administration’s social justice program, which aims to provide land to the landless farmers. Proclamation 1064 takes its roots from Presidential Proclamation (PP) 1801, which was issued in 1978 by then President Ferdinand E. Marcos. PP 1801 ruled that certain islands, coves and peninsulas
in the Philippines, which include Boracay Island, were declared as tourist zones and marine reserves under the administration and control of the Philippine Tourism Authority. However, being previously an island which has been separated from the land mass and with no legal classification, lands on the island were treated as forestland by the Department of Environment and Natural Resources (DENR), said Undersecretary Jonas R. Leones, the spokesman of Secretary Roy A. Cimatu.
CARP status
THE DAR’s own accomplishment report said all CARPable lands in Malay have been distributed as of last year. The CARPable land covers a total of 1,882 hectares, which were distributed to a total of 2,795. This, however, should not have ended CARP implementation, as Carp is a continuing social justice program that aims to distribute land to the landless. Prior to Duterte’s pronouncement, there is no CARP-covered land on Boracay Island. This was debunked by officials of the DAR. In fact, some parts of Boracay can now be added as land distribution balance under the program. During a news conference in Quezon City on April 30, DAR officials led by Secretary John R. Castriciones and Undersecretary David D. Erro said agrarian reform was implemented on the island even prior to the CARP. While saying Duterte has no marching orders yet to place Boracay’s agricultural land under CARP, if so ordered by the President, the DAR is ready to implement the order, which he said “stands on valid and legal grounds.” “There was agrarian reform on Boracay Island before,” says Erro, “so the President is correct in placing Boracay under land reform.” “There’s a leasehold contract. Sometime in March 1992, there’s already a leasehold contract under PD 27, the land reform version of [then President] Marcos,” he said. “There is 0.5 hectare covered by a leasehold contract in Barangay Manoc-Manoc.” There are also approved land conversion applications that exempted a total of 80.61 hectares of agricultural land from CARP. These are the 80.11-hectare land in Barangay Yapak, filed by the heirs of Federico Sarabia and Salvacion Sarabia, the owners of Sarabia Optical which is now part of the Fairways & Blue Water, a famous resort on the island; and a 0.5-hectare lot assigned to Ignacio Colesio of Boracay Island Water Inc., a subsidiary of the Ayala-led Manila Water in Barangay ManocManoc. On top of these approved land conversions is a 139.83-hectare agricultural land in Barangay Yapak, filed by Fil-Estate Properties Inc., which was approved by the DAR on June 2, 1998.
Possible coverage
DAR officials undertook a site inspection on Boracay a few days after Duterte publicly announced his plan to put Boracay under Carp. According to Castriciones, the DAR was able to establish that a total of 15.5 hectares of agricultural land on the island can be immediately covered by land reform. But he said there remain 408.51 hectares that were exempted and converted under CARP with “illegal structures” that can be covered and added to the balance for land distribution
Is Boracay C
under CARP and CARPer. These could and would be distributed “if the President so orders.”’ The two officials noted that out of 31 homestead or free patents issued on Boracay, 21 were subjected already to reversion proceedings. According to the two officials, the indigenous people (IP) living on the island will be the priority beneficiaries in case of CARP implementation. There are several IP tribes living on the island, but they are now concentrated in a two-hectare beachfront in Barangay ManocManoc, protected by a Certificate of Ancestral Domain Title (CADT). “These Atis of Boracay were farmers who were driven away from their ancestral land,” Castriciones said. The DAR in Region 4, he added, identified 84 possible agrarian reform beneficiaries on the island.
Legal ground
PLACING Boracay under CARP and CARPer is also covered by existing policies. A research conducted by the BusinessMirror revealed that Executive Order (EO) 407, as amended by EO 448 and EO 506, is applicable. Under such policy, there is no need to issue a notice of coverage (NOC) but the government will just turn over the land and document ownership for distribution to farmer-beneficiaries. EO 407, as amended, was issued during the effectivity of RA 6657. RA 9700, to note, did not totally repeal RA 6657 as it is merely an amendatory law. For government-owned agricultural land, alienable and disposable untitled public agricultural land (Upal), or even titled agricultural land foreclosed by
government financial institutions, land reserved for public purposes covered by proclamation but no longer alienable and disposable for the purposes of reservation may all be covered under EO 407 and there would be no need for a notice of coverage. As for privately owned titled agricultural land, the CARPer deadline of June 30, 2014, for the issuance of a notice of coverage applies. But those who may be affected in Boracay are applicants of alienable and disposable UPALs if there is any. UPALs and alienable and disposable lands, technically, are within the jurisdiction of the DENR. The President, however, should issue a proclamation declaring these lands as land reform area for distribution to qualified farmerbeneficiaries. But there are other existing
policies related to CARP and CARPer that need to be further studied.
Agri-tourism spot?
WEIGHING in on the issue of Boracay being placed under CARP, government officials and an expert are supportive of the plan. Castriciones said, “If that is the policy directive of the President, we will follow suit.” “Well, I am here as a soldier of the President. If the President says so, I will implement it,” he said, adding that not the entire Boracay land may be distributed to farmers since not all areas can be farmed, such as beachfronts. Leones said that if ever the government pushes through with the land reform plan, it would be possible that Boracay will still be a tourism zone while it maintains farms. “That is the ideal direction. We
aderLook
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It was the indigenous people who were into subsistence farming, he added. Dy said subsistence farming is different from commercial farming as subsistence farming refers to self-sufficiency farming. The Philippines was among the top eight agri-tourism destinations in the world at the Mother Nature Network’s website. Other destinations included on the list were Taiwan, Brazil, California, Hawaii, Grenada in the Caribbean, Mallorca in Spain and Tuscany in Italy.
Tourism-dependent
BORACAY, however, is now heavily populated since the tourism boom that started in the 1980s and 1990s. Many lands on the island, both forestland and agricultural land, have been built with commercial and residential buildings. In 2000 there are only around 12,000 residents on the island. In 2015 the population grew to 32, 267, accounting for more than 60.9 percent of the population of the Municipality of Malay. Tourism on the island employs around 17,000 individuals from Boracay and mainland Malay, according to the Malay-LGU records. Together with the informally employed, Boracay Island provides employment to more than 35,000 people—including vendors, sandcastle builders, tattoo artists and entertainers. Malay’s economy is heavily dependent on tourism activities on the island. There have been no farming activities on the island for a very long time, according to persons familiar to the matter. They added tourism has been their way of life for a very long time.
CARPable? call that sustainable development,” he said, noting that it would be great if the island can also maintain a source of food production within the area. “The status of Boracay will be great because you will be able to manage and maximize and optimize the benefit within the island rather than just having mostly buildings and tourists,” Leones added.
Losses
IN a Palace briefing earlier this month, DILG Assistant Secretary Epimaco Densing III said the country will be losing an estimated P18 billion to P20 billion in gross tourism receipts if Boracay will be closed for the whole six months. That is why they are targeting to finish it within three months to four months. Asked if what the country will be losing in tourism receipts can be
regained in what the country will be gaining from utilizing the agricultural lands in Boracay, Leones said: “Yeah, who knows?” “We have too much gross [tourism] receipts and we have gained a lot of revenues. There are many buildings there even in forestland if you put buildings there,” he said. “But will that ensure the stability of the island?” Leones added the DENR believes converting Boracay “into something stable, sustainable, the profit will not be that immediate.” “But in the long run…because of sustainability of the island in the long run, we will be benefitting more,” he said.
Land audit
LEONES said mid-April that the President has directed the interagency to conduct a land audit in Boracay to determine the status
of the land and to identify which parts of the agricultural land can be distributed to farmers. Leones said they are already undertaking a land audit. “We need to know what can be given to farms, although we already know that there are 600 hectares of agricultural land,” Leones said. “But what is the status of the area? What are the lands available for distribution to farmers?” According to Leones, some of these areas have been occupied by buildings, occupied by other infrastructure. “So we need now an audit of this agricultural land,” he said, noting that the DAR should be requested to be involved in determining the areas that may possibly be given to farmers.
Agri-tourism?
ROLANDO Dy, executive direc-
brix villaruel
Farms where?
tor of the University of Asia and the Pacific’s Center for Food and Agribusiness, said the loss in gross tourism receipts cannot be compensated with the possible revenues from maintaining farms in Boracay. Dy also suggested that Boracay should instead be transformed into an agri-tourism spot and that the government should have a comprehensive plan for such vision. “There should be a manager for agri-tourism. There is a need for professional managers because tourists are a big market,” Dy said, citing agri-tourism examples such as the butterfly farm in Penang, Malaysia. “You can also do an aviary farm. Maybe that has more high value than just planting corn.” Dy, however, noted there were only subsistence farms before Boracay boomed into a world-famous tourist spot.
AS it already is, Boracay is becoming overcrowded, with residential and commercial buildings even encroaching on supposedly no-build zones like forestland, wetland and even coastal areas or beaches. Even Boracay’s main roads are not spared from illegal construction activities, with a total of 679 structures having been listed as violators of the 12-meter road easement rule. But Cimatu said about 98 percent of those with structures that need to be removed from the roads have agreed to self-demolish. Meanwhile, owners of 948 structures—business establishments, commercial, commercialresidential, and residential buildings—were issued show-cause orders for violation of the Forestry Code of the Philippines so far. The DENR is expected to evaluate all documentary evidence to be presented by those accused of violating the Forestry Code to prevent eviction and the demolition of their illegal structures. The latest list obtained by the BusinessMirror revealed that many of these “illegal occupants” have justified their construction, although it has issued a total of 161 notices to vacate to those who failed to show proof that they are legal occupants.
Economic impact
THE militant Kilusang Magbubukid ng Pilipinas (KMP or movement of peasants in the Philippines) led by Danilo Ramos told the BusinessMirror they are more concerned about the potential economic impact of the loss of jobs and livelihood on the island because of the six-month arbitrary closure imposed by the Duterte administration. Ramos argued that even if there are productive agricultural lands left on the island, they may not even qualify under CARP, because of the elevation or slope, which is above 18 degrees. Even if a piece of land is classified as agricultural, he said, there is an existing guideline that restricts CARP coverage to productive agricultural land with tenants or qualified beneficiaries. “We are more concerned about the fishermen who will be affected by the closure. These fishermen provide services to tourists [divers] who want to go boating,” Ramos said.
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Asked how they are planning to remove “illegal structures” built on agricultural lands on the island, Castriciones said it will be the job of other national government agencies, including the local government of Malay.
Fragile environment
BORACAY has a fragile ecosystem. In fact, the DENR led by Cimatu has already put in place a policy that will enhance the management of a portion of the island through the declaration of a “critical habitat” under RA 9147, or the Wildlife Act. Cimatu is expected to sign a Department Administrative Order establishing 750 hectares as part of the Boracay Island Critical Habitat. This is to protect three species of flying foxes, also called fruit bats, cave-dwelling insect bats, and marine turtles that frequent its beaches, particularly the Puka Shell Beach. Aside from the Boracay Island Critical Habitat, there are also missing wetlands which the DENR chief wants to recover from illegal structures. Agriculture is known to have an adverse impact not only on biodiversity in the upland areas but also in the coastal and marine environment. Already challenged by pollution, the wisdom of encouraging agricultural production on an already fragile island is again put to fore. Everybody has a piece to say about what should be done to Boracay. But nobody seemed to take time to listen and listen closely as to what its stakeholders really want. From the beginning, many Boracay stakeholders have expressed support to rehabilitate Boracay— but they never agreed to shut it down because of its adverse economic impact to the entire town.
Legal battle
ON April 25, a day before Boracay’s closure, two workers and a tourist filed a petition before the Supreme Court challenging the government’s decision to close Boracay to tourism activities. Filed before the SC are petitions for prohibition and mandamus against President Duterte, Executive Secretary Salvador Medialdea and Interior Secretary Eduardo Año. Sandcastle-builder Mark Anthony Zabal, driver Thiting Jacosalem and Odon Bandiola, a tourist, sought for a temporary restraining order, a preliminary injunction and/or a status quo ante order from the SC. They said that the closure order is “a patent abuse of power and reckless disregard of the law” and “infringes on their Constitutional rights to travel and due process.” Their argument is also aired by various stakeholders on the island since Duterte first brought up the plan to close Boracay, which he described as a “cesspool”. They said unlike those who were found to have violated environmental laws, they are being punished for acts which they did not commit. Some businessmen are supportive even of the plan to declare certain areas part of a critical habitat, noting that the problem on Boracay has grown from bad to worse. Still, they argue it is not “that worse” to merit closure—and for six months at that.
Wondering
ACCORDING to the DENR, among various violations committed on the island are illegal construction of buildings on no-build zones, conduct of business operations without necessary permits, and discharge of untreated wastewater directly or indirectly into water bodies and aquifers, causing water pollution. Despite their protests, the closure, nevertheless, pushed through and, just a week into the planned rehabilitation, comes now the proposal: declare certain areas of Boracay’s lands that are classified as “agricultural” as CARP area and give it to qualified farmer-beneficiaries. Now, some of the island’s residents are wondering: What have we done wrong?
Banking&Finance BusinessMirror
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‘PHL banks are not on equal positions of strength’–Fitch By Bianca Cuaresma @BcuaresmaBM
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nternational ratings agency Fitch Ratings on Wednesday said the entire Philippine banking industry should not be gauged under one rating as it noted diversity in their risk profiles. The credit watcher said it is wrong to rate the industry under an umbrella of a singular rating, as the three largest banks in the Philippines are significantly more resilient to a downturn than their mid-tier counterparts. Fitch cited the larger banks’ stronger franchises, higher-quali-
ty portfolios and record of execution as important determinants of strength that shows variance across banks in the country. “These differences are reflected in our ratings, with the larger banks rated ‘BBB-’, while the mid-tier ones are one notch lower at ‘BB+’,” Fitch said.
The statement seem to point out to Moody’s rating of Philippine banks, after it assigned “Baa2” long-term ratings to “virtually all Philippine banks,” according to Fitch. Among their differences, as Fitch mentioned, include the top 3 banks’ market share of 13 percent to 18 percent each, with broader branch networks and product sets. Big banks—which were identified as the Bank of the Philippine Islands (BPI), BDO Unibank Inc., and Metropolitan Bank and Trust Co. (Metrobank)—also have different income profiles and stronger possibility for sovereign support should their sheets run down. Mid-tier banks, meanwhile, have a market share of 4 percent to 6 percent each and are less likely to receive sovereign support. “This distinction between banks
of differing systemic importance is again common across many banking systems that Fitch rates, and provides an additional basis for our view that the ratings of all Philippine banks should not be the same,” the credit watcher said. Fitch also believes that the rated mid-tier banks have maintained satisfactory asset quality and capital buffers, but retain higher risk appetites than the large banks, as driven by their ambitions of gaining scale. A common theme among big banks and mid-tier banks, Fitch recognized, is that the robust economic environment has helped all Philippine banks boost their recurring revenues and balance sheets significantly. The Philippine economy grew at 6.7 percent in 2017, one of the fastest growth rates seen across the region.
DBM earmarks ₧490M for Boracay road repair By Rea Cu
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@ReaCuBM
he Department of Budget and Management (DBM) is seen releasing P490 million to the Department of Public Works and Highways (DPWH) for the road rehabilitation of Boracay Island during its six-month closure. Budget Secretar y Benjamin E. Diokno said in a news conference on Wednesday that the P490 million will be used to rehabilitate the Boracay Circumferential Road in Aklan. “Actually, P50 million has already been released for the improvement of the Boracay Circumferential Road and this is part of the 2018 GAA [General Appropriations Act]. The P50 million will be augmented with the additional P490 million to fast-track project completion,” Diokno said. Charged against savings generated by the DPWH in FY 2018, the fund will be used to accelerate the construction of the 5.2-kilometer road that will strictly follow the 6.10-meter carriageway standard on both sides. The project will incorporate an improved drainage and sewerage system along the main road to contain in-land flooding, according to the DPWH. It will be divided into three sections, with the first phase to start from Cagban Port to Rotonda (1.4 km), the second from Rotonda to Barangay Balabag (1.9 km) and the third from Barangay Balabag to Barangay Yapak (1.9 km).
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ADB, DFID to finance studies to improve intraregional trade By Cai U. Ordinario
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@cuo_bm
o help boost intraregional trade between and among developing member-countries (DMCs), the Asian Development Bank (ADB) and the Department for International Development (DFID) launched on Wednesday the Asia Regional Trade and Connectivity Fund (ARTCF). The fund will be used to fina nce st ud ies on improv ing intraregional trade in Central and South Asia, as well as in the Asean, particularly the Asean+6. The ADB said the DFID will provide an initial contribution of up to $30 million. The countries that will initially be granted access to the fund are Afghanistan, Bangladesh, India, the Kyrgyz Republic, Myanmar, Nepal, Pakistan and Tajikistan. “The ADB’s partnership with DFID will help further our ambitious knowledge-driven agenda and ensure that our members have access to the most effective, evidence-based solutions to further their regional integration goals,” said Bambang Susantono, ADB vice president for Knowledge Management and Sustainable Development. ADB Chief Economist Yasuyuki Sawada said Asia regional cooperation and integration (RCI) has been mandated by the ADB Charter itself. To this end, the ARTCF can contribute a lot to the region since intraregional trade and investment has spurred the growth of DMCs for many years. Sawada said with intraregional trade investment accounting for more than half of the trade and
investment in the region, the ARTCF can further enhance this cooperation and boost growth in the coming years. “In that respect, we cannot overemphasize the importance of regional cooperation integration. To facilitate more, we need some solid research and also continuous support for cross-border infrastructure. These are quite critical,” Sawada said. In line with the ADB’s Operational Plan for Regional Cooperation and Integration 2016-2020, ARTCF will help the selected ADB developing member-countries to identify and design projects that improve cross-border transport, energy and information and communications technology infrastructure. It will also help recipients of the fund tackle red tape and regulatory bottlenecks; provide financing for regional projects to increase their poverty reduction and gender impacts; and strengthen the capacity of the member-countries for prospective investments. Since joining in 1966 as a founding member, the government of the United Kingdom has contributed $3.09 billion in capital subscription to the ADB and committed $1.43 billion to the bank’s special funds as of December 31, 2017. The ADB and DFID’s first cofinancing collaboration was in 1996, and since then, the two institutions have partnered on poverty alleviation, infrastruct u re d e v e lo p me nt , f i n a nc e , health, climate change, and public and private partnerships to benefit the people of the AsiaPacific region.
Case clippings
By Justice S J Ranada Jr.
Filipinos work on a road-widening project as the government implements the temporary closure of the country’s most famous beach resort island of Boracay, in central Aklan province last Thursday. Many workers in the island are now jobless as Boracay, famed for its white-sand beaches, closes for up to six months to recover from overcrowding and development. AP Photo/Aaron Favila
Diokno said the DPWH request of P490 million funds for Boracay is now being processed by the DBM subject to the approval of the Office of the President. “The DBM has also released P448 million to the Department of Labor and Employment [DOLE] on April 27 to cover the financial assistance to 17,735 affected residents and workers in Boracay,” Diokno added. He said under the 2018 GA A,
P13 billion was allocated for the country’s contingent fund, and the government can fund the total cost for the rehabilitation of Boracay Island with funds coming from the contingency and calamity fund. “We can finance it from the 2018 budget, no need for a supplemental budget. [This will be] coming from the contingency and calamity fund,” he said. In April the National Econom-
ic and Development Authority said the Philippine economy can lose around P1.96 billion during the closure of Boracay for six months. Socioeconomic Planning Secretary Ernesto M. Pernia told financial reporters that the closure of Boracay will result to a reduction on the country’s GDP amounting to P1.96 billion for two quarters. Boracay was closed on April 26 this year.
Govt fully awards ₧10-billion Treasury bonds he Bureau of the Treasury has fully awarded the P10-billion Treasury bonds (T-bonds) up for auction on Wednesday. National Treasurer Rosalia V. de Leon said the auction committee decided for a full award of the five-year T-bonds amounting to P10 billion seeing that market investors prefer the tenor bucket, also fueled by the recent credit rating upgrade of Standard & Poor’s to “positive” for the Philippine economy. “They like the five years, it’s a sweet spot. The three- and the five [-year tenor buckets], that’s where they flock. And I think, because of the slew of good news lately, it’s positive,” de Leon said.
Editor: Jun B. Vallecera • Thursday, May 3, 2018 A8
Tenders for the government security reached P18.924 billion with the auction committee having to reject P8.924 billion in the end. The average annual rate for the IOU settled at 5.592 percent, which is 9.2 basis points higher than the coupon rate of 5.50 percent. “Obviously, it [the credit-rating upgrade] helped because it’s also a good signal, like 12 months down the road we might be ready for another rating upgrade because we are rated positive now. So the market is also following what ratings have already been given for the Philippines,” she added. The annual average rate for the T-bond also shows a 14-basispoint increase compared to the
previous auction’s annual average rate of 5.452 percent. In addition, she said the planned Samurai bond issuance of the country is an opportunity for the Philippines to have another good transaction, coming from the recent success of the country’s Panda bond issuance. “So, with the positive outlook, I think there is also a good window for us to be able to replicate again another good transaction, we just have to watch carefully the pipeline in the Samurai [market]. And also pronouncements coming from Governor [Haruhiko] Kuroda,” she said. The Department of Finance recently said it is planning to issue yen-denominated debt or
Samurai bonds in the second half of the year in line with plans to diversify the country’s bond portfolio. Finance Secretary Carlos G. Dominguez III told financial reporters the issuance of Samurai bonds will likely push in September or October. The Philippines last sold Samurai bonds in 2010 worth $2.5 billion, which allowed the government to complete its commercial funding exercise that year. The IOUs had partial backing from the Japan Bank for International Cooperation, which helped explain the excess in demand from Japanese investors who submitted far more subscriptions than what was available. Rea Cu
LAWYERS—Disciplinary proceedings Disciplinary proceedings against lawyers are sui generis. Neither purely civil nor purely criminal, they do not involve a trial of an action or a suit, but rather an investigation by the court into the conduct of one of its officers. It involves neither a plaintiff nor a prosecutor and may be initiated by the court motu proprio, to determine if the attorney is still fit to be allowed the privileges as such. Rico v. Attorney Salutan 05 Mar. 2018
AC 9257 Peralta, J
Pagcor Q1 income hit P15.798 billion
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he Philippine Amusement and Gaming Corp. (Pagcor) said it earned P15.798 billion from gaming operations in the first quarter of the year, which was 4.67 percent higher than its target of P15.093 billion. Based on Pagcor’s latest financial statement, the state gaming firm’s first-quarter income was 12.5 percent higher than 2017’s P14.043 billion. The agency paid out gaming taxes and contributions amounting to P8.294 billion for the quarter, which is 12.5 percent higher than the payments made in the same period for 2017 at P7.372 billion. The payments were made in compliance with the 5-percent franchise tax, and its 50-percent share to the government, including contributions to the Dangerous Drugs Board. Total expenses for the quarter reached P7.031 billion, which expanded by 9.66 percent, from P6.412 billion in the same quarter last year. Total income for the first quarter, less gaming taxes and expenses, amounted to P1.416 billion, which was 103.75 percent higher than its target for the quarter of P695 million. Year-on-year, this
showed a growth of 7.63 percent, from P1.315 billion in the same period last year. In March Pagcor said revenues from online gaming operations will likely reach P6 billion after the rollout of a third-party audit system. Pagcor Chairman and CEO Andrea D. Domingo said a third-party audit system, which monitors the operations of the 53 Philippine Online Gaming Operators (Pogo), will enable Pagcor to tract the revenues generated by the Pogos in real time. Revenues from Pogos in 2017 reached P3.9 billion, and Pagcor expects to double the amount this year. The third-party audit system will adopt mirrored applications both for operators and for the respective business-process outsourcing (BPOs) centers to enable Pagcor to monitor revenues and operations simultaneously. License fees charged to each Pogo operator amount to $200,000, while the application and processing fees cost $15,000. On top of the fees, Pagcor requires operators to put $250,000 cash fund just in case they can’t pay bets that win.Rea Cu
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DSWD readies cash-for-work program for Boracay workers By Jun N. Aguirre Correspondent
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ORACAY Island—The Department of Social Welfare and Development (DSWD) in Western Visayas will start soon the cash-for-work program for thousands of Boracay residents, workers and the Aetas. Rebecca P. Geamala, DSWD regional director for Western Visayas, said she has already asked the central office for an initial P524-million funding for the cashfor-work program. Pr ior to t he prog ram, t he DSWD-WV has also implemented the “Balik Probinsiya” (back to the province) program that Geamala said has benefited around 2,251 workers. Currently, the said program continues alongside the assessment to ensure nonduplication of beneficiaries. The DSWD spent P5 million for the 2,251 workers. “The DSWD has enough funds for the entire closure of Boracay. That is guaranteed,” she said. “For the cash-for-work program, each family may be provided with a fee below P10,000 per month, enough to sustain their living.” The program entails assisting in the rehabilitation of work in this resort island, including cleaning. Some of the workers came from as far as Manila and the DSWD have paid for their plane tickets going home. The DSWD is also planning to implement a sustainable livelihood program.
NGO alert
MEANWHILE, Terry L. Ridon, a lawyer and former urban poor chief of Duterte, seeks to ensure government assistance to displaced families during the demolition of structures. “As the President stands firm on the rehabilitation of Boracay, the government should ensure that housing assistance is provided to all ISFs [informal settler families] covered by demolition orders,” Ridon, currently convener of InfrawatchPH, was quoted in a statement issued on May 2. Ridon said “no demolition without relocation” is among the longstanding presidential policies of the President, which should correspondingly be implemented during the Boracay rehabilitation. “While we appreciate the commitment of the [Task Force Boracay] that housing assistance will be provided to all affected ISFs, we have yet to see the engagement of relevant agencies into the matter, such as the National Housing Authority [NHA] and the Presidential Commission for the Urban Poor [PCUP],” said Ridon, former partylist representative of Kabataan. He explained the NHA provides the housing assistance, while the PCUP ensures all protections and entitlements are afforded the affected families. “Housing assistance should be given a share in the calamity fund that will be used for the Boracay rehabilitation,” he added. Ridon said housing assistance can include resettlement areas within Boracay to house the island’s low-income communities. “Many affected ISFs are informal or low-income workers doing various jobs in the island,” Ridon added. “It would be good to provide them housing within the island as they comprise the base of service economy of Boracay.” Ridon said transitional shelters can be set up by the NHA during the rehabilitation months. “The NHA has done a good job in the quality of transitional shelters in Marawi,” he added. “Perhaps, they can do the same for all the affected ISFs in Boracay.”
Editor: Dennis D. Estopace • Thursday, May 3, 2018 A9
New DENR list reveals more Boracay businesses violated environment laws
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By Jonathan L. Mayuga
@jonlmayuga
HE Department of Environment and Natural Resources (DENR) is now consolidating the list of business establishments operating on Boracay Island that face severe penalties and fines for violation of various environmental laws. As of April 26, a consolidated list—a copy of which was obtained by the BusinessMirror—revealed a total of 468 environmental law violators. They have been issued a notice of violation by the DENR. A total of 254 were for violation of the Clean Water Act—specifically either for having no or expired “Discharge Permit.” A total of 190 were issued a notice of violation for operating generator sets without or having expired permits from the DENR, which is considered violating certain provisions of the Clean Air Act. Four other establishments were issued notice for violation of both the Clean Water Act and Clean Air Act. Meanwhile, 20 companies have been found to be operating without an environmental compliance certificate (ECC), a violation of the Philippine Environmental Impact Statement System or Presidential Decree 1586. The notices were issued between the months of February and the first week of April. The earliest was issued on February 13, 2018, while the latest to be issued the notice was on April 6, 2018.
Business inquiry
MANY of those issued with notices of violation have since approached the DENR office in Aklan to inquire how to address their problems. They also expressed the intent to apply for necessary permits to be allowed to operate legally and avoid the penalty and fines, according to DENR officials. Representatives of a few businesses, however, claimed they have stopped operation for a long time, while others said the buildings have been used for residential purposes. Still, many of the companies with notices of violation have not taken action or corrective measures. The BusinessMirror earlier published a list of 195 business establishments identified as “not connected to sewer lines.” Of these, nine establishments have connected to proper sewer lines. Some of these establishments also failed to show valid discharge permits, while some only have expired discharge permits to show. DENR Undersecretary Jonas R. Leones, the designated spokesman of Secretary Roy A. Cimatu, said the notice of violation is only the first step in determining the culpability of the violators.
He maintained that the DENR will give all business establishments accused of an offense the opportunity to present evidence to prove they are compliant with permitting requirements and standards set under various laws.
Technical meetings
THE DENR is one of three government agencies comprising Task Force Boracay (TFB) tasked by President Duterte to address the environmental problems on the island resort in the municipality of Malay, Aklan province. The two other agencies are the Department of the Interior and Local Government and the Department of Tourism. “There will be a technical meeting and during the technical meeting, they will be asked to present proof or evidence such as ECCs, permit to operate, discharge permits, [etc.],” Leones said. “During the technical meeting, if they have shown proof and the DENR is satisfied, there will be verification and validation. If they have fully complied and passed the requirement, then the process stops. If not, then they will face penalty and fines under the law.” Severe penalties and fines await defiant companies, especially for violation of the Clean Water Act, Leones said. Under the Clean Water Act, for instance, the law and its implementing rules and regulations state that a violator may face a fine of P10,000 to P200,000 for every day of violation until such time that a corrective measure has been instituted and the environmental standards have been satisfactorily met.
Fine island
ALL business establishments that discharge water are required to
secure a discharge permit. This process will determine the volume and quality of the wastewater to be discharged. For effluents, the standard water quality allowed should not exceed 400 most probable number (MPN) per 100 liters. Sewage runoff could contaminate water sources and make it unsafe to drink, or unsafe even for bathing, such as in portions of the Bulabog Beach where coliform bacteria level was found to be very high. At one time, the level reached over 2 million MPN/100 liters, which is enough to cause skin irritation and itching, or cause serious infection by mere skin exposure or upon ingestion. According to Leones, the DENR’s undersecretary for policy, planning, international affairs and foreignassisted projects, the Pollution Adjudication Board (PAB) may convene anytime once the DENR Region 6 office has forwarded its complaints against the alleged violators of environmental laws. The official said the campaign in Boracay also applies in other tourism areas where the DENR has launched a crackdown against erring business establishments. He added the fines for violation of environmental laws will later be determined by the PAB, chaired by Cimatu, but will be presided over by Undersecretary Rodolfo Garcia. The PAB is composed of the chairman or a presiding officer, three DENR undersecretaries and three private-sector representatives. “The board is ready to convene anytime. We are just waiting for the Regional Office to submit a final list of violators,” he said
Double time
AMONG those found without ECC
was Eurotel Boracay, which operates a hotel in Sitio Mangayad in Barangay Balabag. T h e h o t e l h a s s u b m it t e d through its manager, Mar ife Las, a letter explaining its side. The letter has attached documentary requirements for ECC application in August last year. It was not immediately known what happened to the company’s application for ECC. The DENR is working double time to evaluate all necessary documents submitted by responding companies notified of their violations, according to Leones. Crown Regency Prince Resort, Short Time Hotel, Summit Hotel, Erus Suites Hotel, Zoe Mel Resort Hotel, Boracay Paradise Hotel, Paradise Garden Hotel & Convention Center, LSM Square Hotel Boracay of LSM Square Commercial Center, Wind Riders Inn and Café, Jim Da Hang Environmental Center, Boracay Island Water Co., Ambassador Inn Paradise Resort, Turtle Inn Resort, Solid North Realty & Dev. Corp. complete the list of businesses with no ECCs. Boracay, a world-famous tourist destination, is known for its white-sand beaches and pristine water. On April 26, upon the recommendation of TFB, the island resort began a six-month ban on tourism activities. During this period, the TFB hopes to fix sewer lines and connect businesses to prevent the direct discharge of untreated wastewater that causes water pollution; address the looming garbage crisis on the island; remove obstruction to decongest traffic; and address the perennial flooding problem in some low-lying areas on the island.
IRRI, PhilRice ink deal for robust rice variety
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DRY DRAPES
A man walks through a curtain of curing tobacco leaves inside a barn in Santiago, Ilocos Sur. Good weather with rare rains brought a good harvest for tobacco farmers this year. Laila D. Austria
HE International Rice Research Institute (IRRI) said it has partnered with the Philippine Rice Research Institute (PhilRice) to push for higher adoption rate of climate change-resilient rice varieties among farmers in Region 4A to improve their productivity and cut weather-related losses. In a news statement on Wednesday, Irri said they are currently working with PhilRice Los Baños Station “in accelerating the adoption of next-generation varities for smallholder farmers in Cavite, Laguna, Batangas, Rizal and Quezon provinces.” The partnership between the two agencies is through the NextGen project spearheaded by the Los Baños-based IRRI, which seeks to promote new rice varieties to Filipino farmers. “We have good-quality varieties, which, coupled with mechanization and good farming practices and technologies, will boost rice production and improve the lives of farmers in the region,” PhilRice Los Baños Branch Director Rhemilyn Relado was
quoted as saying in the statement. The NextGen project was able to distribute 100 bags of NSIC Rc302 to farmers who attended PhilRice Los Baños Station’s Lakbay Palay held recently, according to IRRI. NSIC Rc302, commonly known as Tubigan 25, is an IRRI-bred variety intended for irrigated lowlands. The rice variety is “characterized with extra-long and slender grains, fair brown rice and milling recovery, and improved eating quality,” according to IRRI. “We hope that through this activity with PhilRice LB, NextGen will be able to spread IRRI-bred varieties further and realize our goal of making high-yielding and climate change-resilient varieties more available to our farmers,” IRRI assistant scientist Lorraine Cappleman said. Lakbay Palay is a regular activity organized by PhilRice, an attached agency of the Department of Agriculture, which seeks to introduce farmers to better varieties and improved farming practices in the field, according to IRRI. Jasper Emmanuel Y. Arcalas
Govt gives checks to Davao farmers hit by calamities
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ARMERS in Davao City who were affected by recent calamities recently received indemnity payments from the Department of Agrarian Reform (DAR). The DAR said it facilitated the release of the indemnity checks on April 20 to a total of 19 farmers under the Agrarian Insurance Program. The AIP is jointly being implemented by the DAR and the Philippine Crop Insurance Corp. (PCIC). In a statement, the DAR said a total of P306,454.35 worth of indemnity payment were released to the farmers whose farms were directly affected by calamities last year.
The distribution of checks was led by Municipal Agrarian Reform Program Officer Dennis G. Into, together with Leonora Solidarios, the insurance adjuster from PCIC who represented PCIC Region 11 Director Bonifacio Pales. In her message, Solidarios told the recipient agrarian-reform beneficiaries (ARBs) that the amount of indemnification was relative to the actual damages in their farms based on the inspection and validation conducted by PCIC. Based on their findings, she said, some ARBs will receive indemnification of P1,000 ($19.26),
while some will received P88,000 ($1,694.88) each. The release of the indemnification was the first in the region, where the PCIC and DAR granted checks for individual ARBs engaged in banana production. Solidarios also clarified that it took them seven months to process the papers before the checks were approved for release. She added that all beneficiaries are now covered under the PCIC even sans registration with the Registry System for Basic Sectors in Agriculture (RSBSA). “The office is waiting for the formal guidelines to be able to imple-
ment the said law,” Solidarios said. The beneficiaries themselves will also undergo an orientation on how the amount of indemnity is computed for them to feel the actual support of the government in times of calamities. The distribution of indemnity checks was also witnessed by Chief Agrarian Reform Program Officer Program Beneficiaries Development (PBD) Ruel D. Larosa and Regina Isidor, agrarian reform program officer; and Provincial Information Officer Fraulein G. Montañez. In his message, Larosa said the beneficiaries were granted indem-
nity due to the damages on their crops brought about by a natural calamity that struck the area in September 2017. During the distribution ceremony, Parpo Terso D. Gregorio Sr. instructed PBD personnel to provide support and assistance to PHIC personnel who are conducting validations in the areas. The national government has earmarked some P2.5 billion to the PCIC last year, pursuant to RA 10651 as premium subsidy fund for the full (100-percent) cost of insurance premiums for farmers and fisherfolk listed under the RSBSA. Jonathan L. Mayuga
A10 Thursday, May 3, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
Stopping the TRAIN
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ere’s an ageless fraud that stalemated a lot of good projects in the past: Losing bidders file cases against a government project and the courts issue injunctions. The anomalous part was that losing bidders won when project implementation got delayed. When he assumed office, President Duterte asked the courts to stop issuing restraining orders against government projects. Mincing no words, Duterte warned the courts that he is familiar with the corrupt practice of judges who issue temporary restraining orders after receiving grease money from the party favored by the TRO. Now comes the President’s “Build, Build, Build” infrastructure program, an unprecedented plan to spend more than P8 trillion on dozens of big projects, which could add 1 to 2 percentage points to the country’s growth in 2018 and create 12 million new jobs. Our economic managers said infrastructure has been a major source of concern for foreign investors, who were perennially discouraged by the country’s weak infrastructure and heavy utility costs. To ensure the success of the Build, Build, Build program, the Duterte administration has diversified its funding to include significant loans from China, Japan and other multilateral lenders like the Asian Development Bank, World Bank and the new Asian Infrastructure Investment Bank. But even all of these won’t be enough, which is why economic managers have pushed for the legislation of tax reforms. The Tax Reform for Acceleration and Inclusion (TRAIN) law, which represents the first package of Duterte’s tax reforms, took effect on January 1, raising duties on fuel, cars and sugar-sweetened drinks to offset a reduction in personal-income tax rates. With the full implementation of the President’s tax reforms, the government expects tax revenues to reach P2.637 trillion in 2018, P3.16 trillion in 2019, P3.553 trillion in 2020 and P3.957 trillion in 2021. Part of total revenues will fund the Build, Build, Build program. The speeding TRAIN, however, met some hitches along the way when opposition lawmakers and consumer groups petitioned the Supreme Court to block its implementation, alleging it was illegally ratified and enacted because “the House of Representatives lacked a quorum when it was approved.” Laban Konsyumer Inc., a consumer advocacy group, said it filed a petition for certiorari with an application for a TRO, writ of preliminary injunction and/or status quo ante order before the High Court because the TRAIN law violates the Constitution, which prescribes that taxation must be equitable and progressive. The group added that Republic Act 10963, or the Tax Reform for Acceleration and Inclusion law, “negatively affects millions of Filipino consumers, particularly those from the lowincome and poor families.” The Office of the Solicitor General, however, asked the Supreme Court to deny the petitions for certiorari seeking to block the law’s implementation. In a 76-page comment, the government lawyer said the TRAIN law “was ratified in accordance with the 1987 Constitution and the Rules of the House of Representatives,” adding that the petitioners “failed to present an actual instance where they were negatively affected by the TRAIN law.” Malacañang earlier said it was leaving the matter up to the High Court. Meanwhile, the public can’t help but wait to see whether or not the TRAIN will get derailed. Since 2005
BusinessMirror A broader look at today’s business
First quarter ‘blues’ John Mangun
OUTSIDE THE BOX
T
he term originated with the 17th-century English expression “the blue devils” for the hallucinations that can accompany alcohol withdrawal. This was shortened over time to “the blues” as it came to mean a state of anxiety or depression. “Blue” was also a slang word for “drunk” by the 1800s. And it applies to the first quarter and a little more of 2018.
If we can characterize the mood for 2018 so far, then blue does apply. And perhaps part of it is because of the blue devils from the withdrawal from the good times of 2017. Giving us the blues also must be the “numbers.” Since the beginning of the year, crude oil prices are up 12.4 percent as anyone who buys gasoline is fully aware. Adding to the pain of the hangover is the 3.7-percent depreciation of the peso against the US dollar, which added to the cost of fuel and other goods.
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it was $54.25 and, thus far, in 2018 the price has averaged $66.81. Both business and consumers are still adjusting and trying to figure what to do in the future. Back to the stock market. On January 29 the Composite Index (PSEi) reached it historic high and has been in a downtrend since. Further, during the past three months—end-January to end-April—we have experienced all of these negatives. If we assume that the stock market predates the future three to six months, then the top at the end of January was accurate. What happens now? The peso may have reached its bottom. The stock market also may have reached its bottom. Standard and Poor’s has improved its outlook on the Philippines from “stable” to “positive.” A bottom occurs when prices stop going down. Now we need to see a confirmation of that bottom as prices start going up. The next two weeks are going to be interesting. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.
Isn’t this like the Marcos ministry the Aquino regime junked after dissipating its multibillion-peso assets?
✝ Ambassador Antonio L. Cabangon Chua Publisher
This, in part, has led to the annual inflation rate moving from 2.9 percent in December 2017 to 4.2 percent in March, and expectations are for it to be even higher in April. The new tax laws are also partly to blame for price increases, but I will get to that in a moment. The interest rate on the 10-year Philippine government bond is up 0.50 percent this year. The rate was 5.6 percent at the end of 2017 and actually spiked to 7 percent in April. While not measured directly in the inflation rate index, the higher cost
of borrowing money increases costs throughout the economy. Finally, the Philippine stock market is down 11 percent from its recent historic high monthly closing and has lost 8.6 percent from the 2017 close. As a result, the Bangko Sentral ng Pilipinas (BSP) reported that the business outlook on the economy for the first quarter of 2018 turned less optimistic while remaining positive, with the overall confidence index declining to 39.5 percent, from 43.3 percent for the fourth quarter 2017. While death and taxes is certain —and may be not very pleasant—we have come to expect consistency. We are conditioned to think that about 70 years is a relatively normal lifespan. But if suddenly 20 years will be added to your life, it would upset plans and outlook. The same thing happens when there are fundamental changes to the tax laws. No one is sure what it will mean and it takes time to adjust. We are in that transition period with the Tax Reform for Acceleration and Inclusion changes. The same is true with oil prices. The average price of a barrel of Brent crude oil in 2015 was $43.55. In 2017
T
HE House is creating a ministry or department of human settlements and urban development similar to the one successfully ran by President Ferdinand E. Marcos, but Mrs. Corazon C. Aquino’s vindictive regime abolished it and then stripped its multibillion-peso assets. Marcos set up in June 1978 the Ministry of Human Settlements with specific tasks to socially ameliorate the country’s mass of homeless and hungry people with a package to deliver 11 basic needs: food, water, shelter, clothing, energy, mobility, education, health, ecology, sports and recreation facilities. After President Aquino had exiled the Marcoses to Hawaii with the help of some misguided US officials in Washington, her administration junked the Ministry of Human Settlements and then dissipated its multibillion-peso cash and other assets, including the 500 Kadiwa centers, rolling stores and modern facilities of the Food Terminal Market in Taguig that occupied a 25-hectare prime property and later privatized and sold to the Ayala Group of Cos. Another successful project Mrs. Marcos ran while leading the
Ministry of Human Settlements that did not escape the Aquino regime’s rapacity was the Technological Resource Center Foundation Inc. (TRCFI), a non-governmental agency, that grew into a multibillionpeso organization. The foundation was registered with the Securities and Exchange Commission (SEC) with Mrs. Marcos as the founding chairman and Onofre D. Corpuz as vice chairman, and Jose Conrado Benitez, Edmundo Reyes and Jose Yulo as board members. Assets of the TRCFI included P14 million in cash, four plush villages (Ecology I, Ecology II, Ecology III and Ecoville) in Makati, a building and a big prime lot at the corner of Buendia Avenue and Edsa, seven staff houses in Purok Madera Imelda, a big hatchery farm in Parañaque, bank investments, a plane, a helicopter and a fleet of expensive
cars, among other things. After the Edsa Revolution, the Aquino administration quietly took over control of TRCFI, replaced Mrs. Marcos and other trustees, and named her Executive Secretary Joker Arroyo as chairman; her relative Herminio S. Aquino as vice chairman; and Fulgencio Factoran, Jose M. Kalaw and Pablo de Borja as board members. Unlike other assets that the Marcos family had something to do with, TRCFI was not sequestered. But over the next few months, some of its multibillion-peso assets disappeared one after the other and on February 17, 1987, the name of TRCFI was deliberately changed to Philippine Development Alternatives Foundation (PDAF) and was registered with SEC under 72296. Then-SEC Associate Commissioner Rosario N. Lopez approved the registration. The names of Arroyo and Factoran no longer appeared in the registration. Before Mrs. Aquino left the presidency, Executive Secretary Catalino Macaraeg quietly turned over PDAF to Presidential Commission on Good Government Chairman David Castro without a complete inventory of its assets. The Ministry of Human Settlements initially constructed 5,016 condominium units known as the Bagong Lipunan Sites and Services in seven sites in Metropolitan Manila and by 1985, it had built an additional 450,000 shelters in many
parts of the country with the corresponding basic services and incomegenerating activities, including the Dagat-Dagatan (foreshore land) in Tondo, Malabon and Navotas; the Maharlika Village in Taguig, the first Muslim community ever built in the metropolis; and the Refugee Center in Morong, Bataan, for the thousands of Vietnamese refugees with support funds from the United Nations High Commissioner for Refugees. The Refugee Center that time processed more than 400,000 “boat people.” Because she was also the governor of Metropolitan Manila, she bought at cost 800 brand-new “Love Buses” and a fleet of taxis to make sure that movements of people are not hampered and at a minimum cost. With the help of other agencies, she also launched a cleanliness program and an orderly traffic strategy in Metro Manila and other urban centers. As a result, the people in her time never experienced horrendous traffic in the metropolis, particularly along the now famous 17-kilometer Epifanio de los Santos Avenue or Edsa, where the so-called antiMarcos uprising occurred and where many people saw, as well, the resurrection of discredited elites, hypocrites, narcissists and many dregs of our society who victimized our people and deceived them by using democratic slogans adorned with yellow ribbons, yellow stickers, yellow banners and yellow confetti. See “Arillo,” A11
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A review of the PPAI program
Friends Msgr. Sabino A. Vengco Jr. Atty. Dennis B. Funa
INSURANCE FORUM
T
he Passenger Personal Accident Insurance (PPAI) program, administered jointly by the Land Transportation Franchising and Regulatory Board and the Insurance Commission, is legally sanctioned under Section 387 of the Insurance Code and the LTFRB charter. The PPAI provides for mandatory insurance coverage for public-utility vehicles (PUVs). Data, as reported to the Insurance Commission, shows that accidents involving PUVs have been increasing every year. From 654 in 2014, to 941 in 2015, to 1,044 accidents in 2016. For 2016, most of the accidents involved jeeps (432 accidents), followed by buses (at 354 accidents), sedans (at 112), AUVs (at 82) and trucks (at 64 accidents). The biggest jump in accidents involved buses, from 247 accidents in 2015 to 354 accidents in 2016, or an increase of 43.32 percent. This trend only shows the continuing importance of the PPAI program. Data, however, from the Philippine Statistics Authority (PSA) show a grimmer picture. According to the PSA, 10,012 people died due to road accidents in 2015, which is a 45.76-percent increase from 6,869 deaths recorded in 2006. This could only mean that more accidents occur involving private vehicles or that a significant number of accidents involving PUVs are not reported to the insurers. In any case, data from the PSA also shows an increasing trend in car vehicular accidents. In Metro Manila, according to the Metropolitan Manila Development Authority, it is reported that in 2016 motorcycles had the “highest fatality accident rate” with 218 total number of deaths, followed by trucks (103) and private cars (98). According to the MMDA, 23,105 motorcycles were involved in road accidents in 2016. Motorcycles, however, are not covered by the PPAI. As provided under the rules established by the LTFRB, two consortia of insurance companies were accredited. Each consortium will have at least 10 insurance companies and a lead insurer will be chosen by the members of the consortium. At the option of its members, the consortium may be managed by a management company. The issuance of certificates of cover under the PPAIP shall be on a “free market” basis, meaning a PUV operator has the right to choose from the accredited providers in obtaining the passenger insurance coverage. The LTFRB entered into a threeyear (2015-2018) MOA with two insurance consortia managed by two management companies: SCCI Management and Insurance Agency Corp. (SCCI) and the Passenger Accident Management and Insurance Agency Inc. (Pami). Pami’s lead insurer is UCPB General Insurance Co., while SCCI’s lead insurer is Alliedbankers Insurance Corp. In 2015 the Insurance Commission approved the increase in benefits. Notably, among others, death benefit was increased from P150,000
Arillo . . .
continued from A10
Now fast-forward to the presentday legislative developments and we have the House approving on second reading House Bill 6775 seeking to create a Department of Human Settlements and Urban Development that would address the basic housing needs and requirements of Filipino families. The bill refers to “Human Settlements” as the integrative concept that is comprised of (a) physical components of shelter and infrastructure; and (b) community services to which the physical elements provide support, such as
to P200,000. It should be emphasized that this was done without increasing the premiums, except in the case of buses, which was increased from P1,780 to P2,280 for Metro Manila buses, and from P2,180 to P2,680 for provincial buses. The premiums are inclusive of the documentary stamp tax, premium tax and local government tax. For calendar year ending 2016, a total of 392,299 public utility vehicles were insured. These vehicle units include Asian utility vehicles (AUVs), buses, jeeps, sedans and trucks. Pami insures about 80.68 percent of all the PUV units. Leaving SCCI with a 19.32 percent share. Of the total PUVs, the jeepney (PUJ) comprised the highest number of units at 176,213 vehicles. It has been observed, however, that the number of jeeps has declined by 2 percent compared to calendar year 2015 (179,815 jeepneys). The year 2014 saw 183,585 units of jeepneys. This, perhaps, can be attributed to the government’s effort to phase out the jeep. For sedans, it has increased by 35,801 units (to 90,930), or by 64.94 percent from calendar year 2015 (55,129). This can be attributed to the introduction of transportation network vehicle services, such as Grab and Uber. AUVs, buses and trucks were practically at a standstill. For calendar year ending 2016, a total of P63.01 million in benefits were paid. The majority of these were death benefits totaling P46.25 million for the 296 death claims, or 73.40 percent of the total. Medical claims totaled 2,167 incidents. Because of the increase in benefits approved by the Insurance Commission, the total benefits paid increased by 28.52 percent, or by P13.98 million, compared to the previous year 2015. In terms of the vehicle type from which claims emanated, the jeepney segment had the highest number of claims with 1,066, of which 925 were for medical claims while 138 were for death claims. Jeepney accidents comprised about 43.32 percent of the total accidents. On the other hand, claims from the truck segment only totaled 87. In terms of taxes collected from the program, the annual average was P38.42 million from 2014 to 2016. In 2016, P29.22 million came from collections made by Pami. The taxes included the 2 percent premium tax, documentary stamp tax and the local tax. Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com. education, health, culture, welfare, recreation, food and nutrition. Rep. Jose Christopher Belmonte, principal author of the measure, said the bill will be a step toward providing decent and affordable housing to every Filipino family at the soonest possible time and in the least cumbersome manner as mandated under the 1987 Constitution. Curiously, Rep. Imelda Romualdez Marcos, now 89 but still active in lawmaking, is not one of the 44 others who cosponsored the passage of what looks like a copycat of the 1978 Ministry of Human Settlements. To reach the writer, e-mail cecilio.arillo@ gmail.com.
Alálaong Bagá
T
he union between Jesus and His followers is not a hierarchy of power, but a flowering of friendship and love (John 15:9-11). The full import of the allegorical metaphor of the vine and its branches is here interpreted through an ecclesiology of love.
Divine example “AS the Father loves me” sets the tone for Jesus. It is divine love that explains the mystery of the incarnation of love in Jesus. From within the procession of love in the Trinity, the Son brought redeeming love into the world for humankind to learn and imitate. This love Jesus bears humanity is the direct fruit of the Father’s love for the Son. “Remain in My love”—love means communion. Jesus Himself remains totally with all His will in the love of His Father, as the Father is completely in the love of the Son. Jesus wishes the same intimacy with His disciples. Whereas God is love and lives in perfect unity from within, humankind needed to be called to love and needs still to prioritize love and live by it. To remain (a favorite expression in Saint John) is to abide, to live on in Jesus who is God’s love for us; it is
sharing in the life that unites Jesus with the Father. Not to remain forgoes sharing in that vitality and grace; it is to die like branches cut off from the vine. Like the sheep that follow the voice of the good shepherd, Jesus’ disciples need to listen to His voice and keep His words and commandments; the branches remain on the vine when His words remain in them. Jesus Himself remains in His Father’s love by keeping His commandments and living according to His words. Communion of love expresses itself in the fidelity that is between the lovers.
The commandment of love
The foremost commandment Jesus entrusts to His disciples is “Love one another as I love you.” The flow and circle of love originating in the love of the Father and the Son in the Holy
Validity period of LOA Atty. Rodel C. Unciano
Tax Law for Business
S
ection 6 of the Tax Code, as amended, authorizes the commissioner of Internal Revenue or his duly authorized representative to delegate the examination of any taxpayer for the assessment of the correct amount of tax. On the other hand, Section 13 of the same code explicitly provides that a revenue officer assigned to perform assessment functions in any district must be duly armed with a letter of authority (LOA). Thus, as part of due process, the audit of the Bureau of Internal Revenue (BIR) commences with the issuance of an LOA, which is an official document that empowers a revenue officer to examine and scrutinize a taxpayer’s books of accounts and other accounting records, in order to determine the taxpayer’s correct internal revenue tax liabilities. There must be a grant of authority before any revenue examiner can conduct an examination or assessment. Equally important is that the revenue officer must not go beyond the authority given. In the absence of such an authority, the assessment or examination is a nullity (GR 178697). Thus, unless authorized by the commissioner himself or by his
Under the BIR’s General Audit Procedures and Documentation, a revenue officer is allowed only 120 days from the taxpayer’s date of receipt of an LOA to conduct audit and submit the required report of investigation. If the revenue officer is unable to submit his final report of investigation within the 120-day period, he must then submit a progress report to his head of office, and surrender the Letter of Authority for revalidation. authorized representative, through an LOA, an examination of the taxpayer cannot ordinarily be undertaken. It is the LOA which is
Thursday, May 3, 2018 A11
The foremost commandment Jesus entrusts to His disciples is “Love one another as I love you.” The flow and circle of love originating in the love of the Father and the Son in the Holy Spirit and incarnated in the love of Jesus for each of us is replicated in our love for one another. Thus is created Jesus’ community (ecclesia, katipunan) with us and among us. The command to love indicates that it is not something out of our natural human power, rather it depends solely on Jesus and God who commands it. Spirit and incarnated in the love of Jesus for each of us is replicated in our love for one another. Thus is created Jesus’ community (ecclesia, katipunan) with us and among us. The command to love indicates that it is not something out of our natural human power, rather it depends solely on Jesus and God who commands it. To be so God-like is to move beyond human nature in a supernatural imitation of the Son of God. This Christian love is as extraordinary as to die for someone. Where our natural drive is to hang on to life, Jesus sets before us His own example as the standard: “No one has greater love than this, to lay down one’s life for one’s friends.” A friend is someone worth offering one’s life for, and Jesus calls us
the jurisprudentially recognized document which gives the revenue officer/s named therein, the power to examine the books of account and other accounting records of a taxpayer (CTA Case 8655). Nonobservance of this rule amounts to a violation of taxpayer’s right to due process (GR 222743). Under the BIR’s General Audit Procedures and Documentation, a revenue officer is allowed only 120 days from the taxpayer’s date of receipt of an LOA to conduct audit and submit the required report of investigation. If the revenue officer is unable to submit his final report of investigation within the 120-day period, he must then submit a progress report to his head of office, and surrender the letter of authority for revalidation. Previously, it has been the position of the court that the LOA is valid notwithstanding that the investigation and audit lasted more than 120 days. The noncompliance with the 120-day period to conduct the audit under the Taxpayer Bill of Rights will not nullify the LOA previously issued (CTA EB 1223). In a recent turn of event, however, the Court of Tax Appeals has held that an LOA is valid only for 120 days, and the revenue officer named therein must conduct audit and submit a report thereon within the 120-day validity period of the
Balutan’s unwavering resolve Florante S. Solmerin
FACT IS MIGHT!
T
he earnings of the Philippine Charity Sweepstakes Office (PCSO) continue to flourish under the administration of President Duterte. As for the first quarter of 2018, the agency has already earned P15.9 billion from its lottery games.
The increase in Small Town Lottery (STL) earnings is a record high, reaching P6.1 billion for three months! STL’s earnings isn’t far behind from Lotto’s P7.7 billion. It’s no longer impossible that STL will have its chance to be known in lottery games. The simple explanation of PCSO General Manager Alexander “Mandi-
rigma” Balutan for the increase in STL earnings is that it stems from the success of the expansion of authorized agent corporations (AACs), better known as STL players or agents. According to him, operations of STL has ceased being under the control of gambling lords and some corrupt government officials that served as their protectors.
STL was formed in 2006 as an instrument to eradicate illegal gambling. As I have said, gambling lords have controlled STL operations from 2006 until 2016 together with corrupt officials that protect them. For the first quarter of 2018, STL has earned an average of more than P2 billion per month. Kudos to GM Balutan, Chairman Pinila and the PCSO family for bringing the charity agency to greater heights! From 2006 to the last quarter of 2016, there were only 18 STL players and the annual earnings hit only P4.7 billion. When Duterte appointed Balutan, a retired major general from the Philippine Marine Corps, and the former chairman retired police Gen. Jose Jorge Corpuz, there were a total of 36 AACs by the end of 2016 and STL earnings rose to P6.7 bil-
friends, not slaves who do not share in the inmost life of their master. Jesus assures us that He has told us everything He has heard from His Father; in loving us, we are in intimacy with Jesus and in community with the Father who gives us whatever we ask Him in Jesus’ name. It is a community of encircling and self-offering love, of fidelity and obedience to one another. It is a communion in the Spirit of joy, divine joy shared with us and remaining in us until it is completed in eternity. For our part, we are Jesus’ friends who do what He commands us. He has chosen us and appointed us to bear fruit, privileged to share His life like the branches on the vine bearing abundant fruits of love. Alálaong bagá, the life of communion with Jesus is to be in a community of persons bonded together by the love of the Father and the Son in the Holy Spirit. It is a joyous katipunan (church), a gathering of friends obedient to the divine words and whose norm is “my life for others.” This union of life in love rests on the awareness that Jesus is in each one and that the image of the Father is in all. It is the gathering where a neighbor is a friend, and so where society becomes the neighborhood of friends you offer your life for. Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on DWIZ 882, or by audio streaming on www.dwiz882.com.
LOA. Failure to submit a report within the said 120-day period will render the assessment void, absent any issuance of a revalidated LOA. Any investigation and report issued by an examiner beyond the 120-day period and without revalidating the LOA is void. According to the tax court, if the revenue officer is unable to submit the final report of investigation within the 120-day period, and thereafter submits a final report of investigation without a revalidated LOA, he will be considered to have acted beyond his authority, making the assessment void (CTA Case 8837). The LOA must be revalidated in cases where no report was made within its 120-day validity period (CTA EB 1535). This is another taxpayer’s right that may be invoked in the meantime that the Supreme Court has yet to say a word on this issue. The author is a senior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at rodel.unciano@ bdblaw.com.ph or call 403-2001 local 140.
lion, there being a notable P2-billion increase. In February 2017 the PCSO formally launched the STL expansion with 57 AACs and ended the year with 84 AACs. The PCSO’s earnings shot up to P15.7 billion. The PCSO established AACs in the provinces where jueteng, swertres, masiao and pares thrive. STL was formed in 2006 as an instrument to eradicate illegal gambling. As I have said, gambling lords have controlled STL operations from 2006 until 2016 together with corrupt officials that protect them. For the first quarter of 2018, STL has earned an average of more than P2 billion per month. Kudos to GM Balutan, Chairman Pinila and the PCSO family for bringing the charity agency to greater heights! E-mail: fetad@yahoo.com.
2nd Front Page BusinessMirror
A12 Thursday, May 3, 2018
PHL tourism gets boost from ADB annual meet By Ma. Stella F. Arnaldo
O
Special to the BusinessMirror
VER 4,000 delegates from around the world are participating in the 51st Asian Development Bank (ADB) Annual Meeting, which is expected to boost the business of many tourism-related establishments in the Ortigas Central Business District (CBD). While bulk of the meetings will be held at ADB headquarters along ADB Avenue, several hotels in the area will be hosting some side events and parallel meetings, with delegates billeted at these establishments as well. In an interview with the BusinessMirror, Leeds Trompeta, general manager of the 220-room Discovery Suites Manila, said the hotel occupancy is currently in the “high 90s to 100 [percent]” with delegates having flown in starting last Sunday. Guests include several “premiers or heads of state,” which he declined to identify, with delegates coming from mainly Asia and the South Pacific. Because ADB is a “partner” of the hotel, he said, delegates to the meetings get discounted rates on their rooms. “All they have to show are their IDs,” he said. Trompeta noted the robust turnovers at the hotel ’s food outlets, primarily at 22 Prime, a popular steak restaurant in the Metro, where “some delegates who are checked in here hold some pocket meetings.” Assistant Secretary Arturo P. Boncato Jr., cochairman of the Department of Finance Organizing Committee for the 51st ADB annual meeting, said the
Opportunities... Continued from A1
However, John West also explains that China is not a passive recipient of GVC investments. China has a purposive program of scaling up its participation in the GVCs (meaning climbing upward the technology, skills and valueadded ladder), hatching and promoting its made-in-China GVCs, and, now promoting a “rebalancing” in the economy (such as growing the domestic and export markets in an integrated and balanced way). China and the Asian Newly Industrialized Countries did not adopt a simplistic one-sided liberalization of the economy just to promote GVC investments, as what some GVC economists are trying to push. An Industrial Policy, with capital I and P, is the primary guide in the industrial programming undertaken by the successful Asian countries. This is why in his book, Asian Century on a Knife Edge (2018, Palgrave Press), John West warns that there are risks and challenges in pursuing a pure “GVC-based development” strategy. Special come-ons for GVC investors such as duty-free imports, tax holidays, “soft regulations for labor and environment,” access to cheap land and other resources, and exemptions from limits on foreign ownership can discriminate, directly or indirectly, against the domestic economy and domestic producers. The GVC-based development strategy exposes a country to the vagaries of inter-
“ bulk of the delegates to the meetings are billeted in hotels in the Ortigas CBD,” with parallel meetings being held outside the ADB headquarters by other sectors like civil society, banks and other multilateral institutions. He said other hotels in the Ortigas CBD accredited for the event, which officially started on Wednesday, include Marco Polo Ortigas Manila, Edsa ShangriLa Manila, Linden Suites, Citadines Millennium Ortigas, Mercure Manila, Richmonde Hotel,
Joy-Nostalg Center and Crown Plaza Manila Galleria/Holiday Inn Manila Galleria. Also accredited are Shangri-La at The Fort in Bonifacio Global City, the Makati Shangri-La Manila and Fairmont Makati. The meetings formally end on Sunday. While most delegates are in town strictly for the meetings, Boncato said some delegates who arrived early, “went to Tagaytay and Batangas,” for sightseeing trips. Country delegations, “on their own,” are visiting areas outside Metro Manila and the provinces to check up on the projects they have funded. “The delegations from Australia are in Cotobato City to visit their projects, while there is a delegation that will visit Angat Dam [in Norzagaray, Bulacan], and on Thursday, 10 ministers will visit the Pililla Wind Farm [in Rizal],” he noted. For her part, Aileeen Clemente, president of Rajah Travel Corp., said pre- and post-tours had been made available to the ADB delegates. “We’ve received a number of inquiries, but since today [Wednesday] was just the first day, they haven’t finalized
their itineraries yet.” Some of the tours include short trips to Intramuros, a visit to Greenhills for “retail therapy,” heritage sites in Taal, Tagaytay City and art museums. For short holidays, Clemente said delegates can choose three days-two nights packages to Palawan, Cebu, Bohol and Davao. Rajah Travel has a tour desk at the ADB headquarters. Boncato said the Philippines is one of the fastest-growing economies in the world, and the ADB meetings is a “good chance to showcase our growing economy to the delegates. It is also an opportunity to learn from other countries with stronger economies.” The last time the Philippines hosted the ADB Annual Meetings was in 2012, at the Philippine International Convention Center. It was an opportune time for the government to launch the “Its More Fun in the Philippines” ad campaign in the international arena, with TV commercials and special tourism features airing over CNN International. About 4.3 million foreign visitors traveled to the Philippines that year, the highest on record that time. This year, the Philippines hopes
Failure Of Bidding To Delay Return Of Cheap Rice to Local Markets By Jasper Emmanuel Y. Arcalas @jearcalas
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here were empty tables and chairs at the office of the National Food Authority (NFA) where it conducted its first bidding of the year for rice impor ts under the government-togovernment (G2G) scheme on April 27. The venue was not jam-packed despite the fact that the NFA was under pressure to replenish its depleted stockpile, which fell to less than a day of the country’s total national rice consumption. The NFA had wanted to import rice earlier, but the government’s economic managers and the food agency’s highest policy-making body—the NFA Council (NFAC)—thumbed down the G2G scheme. They claimed that the procurement mode was “vulnerable” to corruption. But the current state of the NFA’s buffer stock forced the government to resort to it again. The food agency was supposed to have a stockpile equivalent to 15 days of consumption, or around 465,000 metric tons. As of April 27 the buffer stock stood at only 8,500 MT. This caused the NFA to stop selling cheap rice. The purchase of rice abroad via G2G would take only 30 days to be completed. In contrast, buying rice via the open tender would require at least 45 days. The food agency now under the Department of Agriculture (DA) is currently struggling to bring back “affordable” rice in the market, the sale of which was temporarily suspended due to the depletion of the NFA’s buffer stock. The poor who patronize the NFA’s cheap rice, however, would have to wait a little longer.
Possible suppliers
In a G2G rice importation, the NFA could only purchase rice from countries with which Manila has an existing memorandum of understanding (MOU). In this case, only Vietnam and Thailand could participate to offer to sell rice to the Philippines. Under the approved terms of reference (TOR), for the NFA’s purchase of 250,000 MT of rice via G2G, the food agency would only accept offers until the 10 a.m. of April 27. On that day, people from the government, media and non-governmental organizations (NGOs) started to arrive by 9:10 a.m. There were circular tables prepared for guests from the media, observers, NFAC and the government. Members of the participating countries sat just across the NFA’s Committee on G2G
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national trade and finance. There is also the added risk posed by advances in technology: Investors can withdraw because robots, artificial intelligence and other innovations have made GVC assembly work cheaper in their home countries. Right now, there is widespread fear in the Philippine call center/BPO sector that there will be a “reshoring” of outsourced customer service back to North America and Europe because of advances in automated interactive communication. In an earlier paper for the South Centre based in Geneva (“Harnessing Global Value Chains,” 2013), Filipino economist Manuel Montes wrote that the issue facing developing countries is not whether to participate in the GVC system. To Montes, the more important question is “how” to participate in the GVC system. In particular, Montes warns that a country may get “trapped” in the middle or in the lower level of the value chain, earning a pittance out of the global value added, which is appropriated mostly by the “lead companies” or MNCs. Montes cited a study by a London economist (Rashmi Banga) showing the skewed distribution of the global value added as follows: OECD countries (67 percent), China (9 percent) and the rest of the world (24 percent). Thus, to Montes, successful participation in the GVCs requires not only measuring the immediate investment and job gains but also assessing and monitoring the medium- and long-term impact of GVC operations for a partici-
pating country. For example: Is export diversification growing or stalled? Are value-added gains increasing or have become stagnant? Do the GVC operations promote backward and forward linkages in the host economy? Montes warns that the supposed gains in the GVC system are being used to justify the adoption of a one-sided facilitation and liberalization program. He cautions the Philippines and other developing countries on policy prescriptions promoting GVC investments, such as the wholesale liberalization of services, the removal of tariffs and the easing of performance and capital requirements for foreign investors. Incidentally, the DTI policy brief has a strange observation: “The Philippines is a relative newcomer to GVCs compared to other countries in the Asean region.” This is historically inaccurate. Even before China, under Deng Hsiao Peng, embraced marketization and export orientation in the late-1970s, the Philippines already had elevated as a national economic policy an economic program dubbed by the National Economic and Development Authoprity then as the “labor-intensive export-oriented ” industrial policy. Part of the promotion of the LIEO is the creation of export processing zones or EPZs (Bataan, Cavite, Baguio and Mactan) and the establishment of bonded warehousing manufacturing units (BWMUs) as base facilities for duty-free reexport manufacturing.
As a result of the LIEO development strategy, the Philippines was able to garner GVC investments in electronics and garments. The problem is that unlike China and some Asian countries, which also participated early on in the emerging GVC system (called then by some academics as the “new international division of labor”), the Philippines was unable to scale up its involvement in the GVC system. It has been trapped in the middle or even lower levels of the GVCs, as what happened in the case of electronics assembly. Singapore had fewer electronics assemblers and yet, it was able to realize higher value-added earnings because it was involved in higher types of electronics assembly and testing. In the case of South Korea and Taiwan, these countries were able not only to scale the technology ladder in electronics; they were also able to develop their own electronics products that were competing with those produced by Japan and other developed countries. The classic example is Samsung: from a mere part assembler of Sanyo, Samsung was able to develop capacity in original equipment manufacture and graduate into original brand manufacture and original design production and eventually into the production of various electronic and industrial products now flooding the world market. One labor-intensive industry that was worth citing here is the export-oriented garments industry. Investors in the industry flocked to the EPZs and took advantage of the BWMU facilities licensed
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by Peza. They were able to make the Philippines as one of the top 10 global garments exporters in the 1970s-1990s. They were able to generate around a million jobs, one-third of which were in the formal factory system, and the rest through the complicated system of subcontracting of embroidery work and parts assembly to home-based producers organized by provincial and town agents. And yet, the industry today is comatose. The quota system under the MultiFibre Arrangement (MFA) provided by North American and European importers and which guaranteed sure market and profits to garments exporters in the earlier decades was removed in 2004 under the Agreement on Clothing and Textiles, per arrangement with the WTO. But more tellingly, concerned policy-makers and garments-industry leaders were informed, through a series of industry studies and tripartite consultations in the 1990s, that due to the scheduled MFA removal and given the emergence of alternative cheaper garment production platforms in Asia (e.g., China, Cambodia, Bangladesh, Sri Lanka and so on), the way forward for the industry was to scale up—that is, to invest on local fiber production, to focus on high-value garments production (e.g., quality designer clothes), to reduce cost of logistics, to speed up export delivery and to invest on better union-management relations. Sadly, very little happened on the scaling-up proposal. The garments industry leaders focused on
250,000 mt The volume of rice that the Philippines is seeking to import under the government-to-government scheme Procurement (CGGP), which oversees the whole bidding process. Representatives from Bangkok were the first one to submit their offers in a sealed envelope at around 9:46 in the morning. Applause filled the room while the Bangkok representative, while holding the sealed envelope, faced the members of the media for a photo opportunity. The sealed envelope was placed inside the empty box, which was in front the table of the members of CGGP. Shortly after, a member of the five-man delegation of Hanoi placed their bids in the box. This was applauded by some of those who attended the bidding. At exactly 10 a.m., Deputy Administrator Judy Carol Dansal, who chairs the CGGP, formally announced the closing of the presentation of offers. Dansal then instructed a member of the secretariat to close the box. “Thank you, governments of Thailand and Vietnam for participating in this G2G tender for the supply of 250,000 MT of rice for the food security and buffer stock of the NFA,” Dansal said. “We invited obser vers from NFA Council, House and Senate Committees on Agriculture, religious sector, NGOs, Office of the President, media and the DA, to show to the public that all aspects of this importation process are above board and in strict compliance with pertinent rules and regulations on government procedures,” Dansal added.
Bid process
Dansal explained that the NFA opted for a G2G importation to fast-track the delivery of rice needed to boost the agency’s buffer stock. “As you know, no less than the President instructed the NFA to immediately replenish our depleted buffer stock.” “And G2G importation is the fastest means of bringing the needed stocks for food security and stabilization of rice prices in the Philippines,” she added. See “Failure,” A2
an expensive program of extending the quota system through a “Save Our Industry” scheme. The SOI program entailed extensive lobbying, with the assistance of expensive American legal firms, for US Congress to pass a law promoting duty-free exportation of American textiles to the Philippines, whose garments producers would be able in return to export duty-free garments to America. Nothing happened out of this campaign under three American Presidents— George Bush Jr., Bill Clinton and Barack Obama. In the meantime, the decline of the garments industr y was preceded by the decline of another industr y—the textile industr y, which was largely domesticoriented. There was ver y little productive linkages between the two industries. With their dutyf ree pr iv i leges, t he ga r ments industry imported everything— sewing machines, textiles, buttons and other paraphernalia. Some even over-imported, with m a ny of t he su r plus impor ts finding their way in the ukayukay markets that have proliferated around the countr y. With no supportive development program in place, the textile industr y simply withered away. Clearly, the Philippines needs to strategize more fully its participation in the GVC system. It cannot simply embrace a simplistic program of trade and investment liberalization based on the naïve belief that growth and jobs would automatically follow.