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n Tuesday, May 29, 2018 Vol. 13 No. 227
PHL, G-33 members want farm trade nego restarted
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By Jasper Emmanuel Y. Arcalas
A trade official privy to the matter told the BusinessMirror the economic interests of the members of the G-33 bloc should
remain the cornerstone of the resumption of negotiations. The trade official who is based in Geneva, Switzerland, where the
“[The SSM] is our gift to Filipino farmers. And we urged the WTO Secretariat [at MC-11] that SSM be [made] part of the issues to be tackled this year.”—Piñol
WTO is also headquartered, said the G-33’s explicit demand was expressed by Jakarta during the informal open-ended meeting of the Committee on Agriculture (COA) on May 24. This was the committee’s first
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HE Philippines and fellow members of the Group of 33 developing countries (G-33) have prompted the World Trade Organization (WTO) to ensure agriculture negotiations resume “immediately.”
2016 ejap journalism awards
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he Philippines remained one of the fastest expanding economies in Asia in the first quarter of 2018, as shown by the impressive gross domestic figures released early this month by the Philippine Statistics Authority (PSA).
The GDP grew 6.8 percent in the first three months of the year against the same period last year, with increased government spending driving the economy. The economic expansion was faster than the 6.6-percent growth in the fourth quarter of 2017 and the 6.5 percent in the first quarter of 2017. Continued on A6
See “G-33,” A2
OIL PRICES UP FOR 3RD WEEK, BUT D.O.F. COUNSELS CAUTION ON CALLS TO SUSPEND ‘TRAIN’
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read Henry J. Schumacher’s ‘integrity initiative’ column in economy section, a4.
TRAIN law’s impact spurs wage debate
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he Duterte administration’s taxreform law continued to generate ideas from the halls of Congress on how to cushion its impact on consumers and the economy. Lawmakers belonging to the Makabayan bloc are pushing for an across-the-board and nationwide increase in the minimum wage, pegging it to a uniform P750 a day. However, the Employers’ Confederation of the Philippines (Ecop) has thumbed down calls for a wage increase, with its top official saying it is not the proper way to address the rising prices of goods and services being blamed on the Tax Reform for Acceleration and Inclusion, or Train law. The debate began after the Makabayan bloc in the House of Representatives filed on Monday House Bill (HB) 7787, or the “P750 National Minimum Wage”bill, citing as raison d’être the Train law’s impact on prices. According to the bill, wage-setting function will be restored to Congress and a uniform P750 minimum wage will be legislated covering private-sector workers in both agricultural and nonagricultural enterprises See “Train law’s,” A2
‘Mission: phl’ Education Secretary Leonor M. Briones (seated, right) and BusinessMirror Publisher T. Anthony C. Cabangon (seated, left) sign a memorandum of agreement for “Mission: PHL,” the BusinessMirror Envoys & Expats Awards. Present during the signing are Department of Education External Partnerships Service Director Margarita Ballesteros, PhD (standing, left), and Philippines Graphic Managing Editor and special project director for Mission: PHL Psyche Roxas-Mendoza. ALYSA SALEN
Experts nix shifting P70-B CCT funds to farms By Cai U. Ordinario @cuo_bm
I
F the government shifts funds for the conditional-cash transfer (CCT) program to boost productivity in farms, poor households not engaged in farming will lose out on government assistance, according to local experts. National Economic and Development Authority (Neda) Undersecretary for Policy and Planning Rosemarie G. Edillon told the B usi ness M irror that the Department of Agriculture (DA) will not be able to
PESO exchange rates n US 52.5860
absorb the P70 billion allocated for the Pantawid Pamilyang Pilipino Program (4Ps). Edillon added that using the funds for farms will also not result in higher productivity in the farm and fisheries sector. “Without addressing the structural problems, it [4Ps for farms] will be ineffective. For fisheries, the big problem is hazy or no delineation of property rights plus poor enforcement of fishing laws. Even if you distribute more fishing boats, catch still won’t increase,” Edillon said. “In coconut, if you don’t address the problem of senile coconuts,
which one cannot cut down by law, even if you provide more fertilizers, production will not increase much,” she added. Claims by Agriculture Secretary Emmanuel F. Piñol—that the CCT has discouraged workers in rural areas from working—was not evidence-based, Edillon said. She added studies by state-owned think tank Philippine Institute for Development Studies (PIDS) showed no significant difference in the work effort between 4Ps families and non4Ps families. See “CCT funds,” A2
OCAL pump prices are on the rise for the third consecutive week, amid a warning by finance officials that hastily suspending the Tax Reform for Acceleration and Inclusion (TRAIN) law, which imposed higher fuel excise taxes, would do more harm than good. Lawmakers, meanwhile, are treading a cautious path, amid rising calls to halt Package 1 of the Comprehensive Tax Reform Program (CTRP) on which the government anchored bulk of its ambitious development goals. Senators said they will await action by the House of Representatives on calls to suspend TRAIN’s implementation even as Congress is supposed to start tackling already Package 2. The second phase of the CTRP cuts corporate income taxes and rationalizes the system for fiscal incentives.
Another round of price hikes On Monday Phoenix Petroleum and PTT Philippines said they will increase the price of gasoline products by P0.65 per liter, and diesel by P0.35 per liter. Pilipinas Shell announced the same price increase for gas and diesel. On kerosene, it will sell it higher by P0.45 per liter. Eastern Petroleum priced its gasoline products P0.60 per liter higher; and diesel by P0.30 per liter. They will all implement their respective price adjustments at 6 a.m. of Tuesday, May 29. Other oil firms are expected to follow suit. On May 22 gasoline prices increased by P1.60 per liter and diesel by P1.15 per liter. They also implemented a price
₧0.65/liter; ₧0.35/liter The May 29 hike in gas and diesel prices, respectively
hike on May 15 for gasoline by P1.10 per liter and diesel by P1.20 per liter. The Department of Energy (DOE) cited world events affecting local pump prices. These include the US announcement on possible sanction on Iran; Venezuela crude production dropping from 2.3 million barrels per day (b/d) to 1.5 b/d due to the economic and political crisis, latest of which is the controversial presidential election; and the Organization of the Petroleum Exporting Countries’ (Opec) deepening supply cut led by Saudi Arabia, which wanted to increase the price of crude to at least $80 per barrel to balance its budget. US oil importers were advised to look for alternative supply of oil to replace that coming from Iran, which owns 12 percent of the Opec supply amounting to 32 million barrels per year. To provide relief to motorists, Phoenix Petroleum said on Monday it will provide a P2-per-liter discount on diesel and a P5-per-liter discount on its premium gasoline variants in select stations for two days. In Metro Manila 20 Phoenix service stations will provide the price discounts on May 29 and 30. Phoenix stations in North and South See “Oil prices,” A2
n japan 0.4791 n UK 70.0235 n HK 6.7029 n CHINA 8.2272 n singapore 39.1936 n australia 39.7445 n EU 61.4625 n SAUDI arabia 14.0222
Source: BSP (28 May 2018 )
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A2 Tuesday, May 29, 2018
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DOLE orders regularization of 76K workers in top 20 firms
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HE Department of Labor and Employment (DOLE) has ordered the regularization of over 76,000 workers from top local companies, which they found to be engaged in illegal laboronly contracting (LOC).
In a news conference, Labor Secretary Silvestre H. Bello III said the workers are employed by 20 companies that their inspectors identified to have the most number of confirmed LOCs from June 2016 to April 2018. Bello said the list is part of the inventory of 3,377 companies—engaged or suspected to be engaged in LOC—they submitted to Malacañang last week in compliance with Palace orders. Out of 3,377 firms, Labor Assistant Secretary and Bureau of Labor Relations (BLR) Director Benjo
Oil prices. . . Continued from A1
Luzon will, likewise, implement the discount on June 2 and 3; and 18 of its sites in the Visayas will carry the discounts on June 5 and 6. The oil firm has yet to schedule a similar price discount in Mindanao. “ There is no minimum spend requirement. The price discount is available for cash and credit-card transactions. PO and bulk transaction are not included,” it added.
Mitigation measures In a recent meeting with the Department of Energy (DOE), oil companies expressed willingness to give discounts and widen their CSR programs to support the transport sector and the marginalized. The DOE and the Department of Finance (DOF) are eyeing new measures on the excise tax and value-added tax on oil as a result of TRAIN’s implementation. The DOE will also be working with the Department of Transportation for the swift implementation of Section 82 of the TRAIN law on fuel vouchers for public-utility vehicles, and pursue the department’s efforts to expedite the unbundling of fuel prices. Based on International Energy Agency (IEA) reports and Mean of Platts Singapore (MOPS) trends, oil supply and demand in the short and medium term is expected to reach $80 per barrel.
DOF’s warning Amid the clamor to suspend excise taxes on fuel, DOF Assistant Secretary Paola A. Alvarez said doing this midyear will leave the government hardpressed to fund its programs. When Dubai crude price reaches an average of $80 per barrel for three months, what will be suspended, according to a provision under TRAIN, is the next tranche of the sched-
Benavidez said 767 have confirmed LOC incidents. “These are the ones with compliance orders. The rest [2,610 of the 3,377] have inspection results from our labor inspectors,” Benavidez said.
Top violators
Jollibee Food Corp. (JFC) had the highest number of workers ordered to be regularized by the DOLE, with 14,960. It was followed by Dole Philippines Inc. with 10,521 workers, and PLDT Inc., with 8,310 employees. uled increase in excise tax on fuel, Alvarez noted. “What is crucial here is we cannot suspend it because of the funding that we need, especially for free education in state universities and colleges, salary increases of government personnel and teachers. We will be having a hard time funding those plans if we suspend those provisions,” she said. Section 5 of Revenue Regulation 2-2018, which provides implementing guidelines for petroleum products under TRAIN, states that: “For the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed, shall be suspended when the average Dubai crude based on Mean of Platts Singapore (MOPS) for three months prior to the scheduled increase of the month reaches or exceeds eighty dollars [$80] per barrel.” Sen. Grace Poe and other senators had called last Friday to recommend the suspension of excise taxes on fuel with the steady rise in petroleum product prices. Alvarez said they are also looking forward to the meeting of the Organization of the Petroleum Exporting Countries (Opec) with Russia, seeing this as helping the country if Russia increases its oil production. According to Alvarez, “one of the reasons the prices of oil is increasing” is the “shortage of supply, so if they plan to increase the output, it would have a better impact because it will lower the inflation rate, [and] because of the increase in oil supply, its price will lower in the market. In the long run, we don’t think [the prices] would reach $80 per barrel because they will be producing more oil.” Presidential Spokesman Harry L. Roque Jr. said earlier the DOE is eyeing to get cheaper oil from Russia, a non-Opec country.
Catch the profiteers Aside from this, the President also ordered the Department of Trade
Last month the DOLE ordered JFC to regularize 7,100 of its workers. It also issued a compliance order to PLDT to regularize 7,306 workers. PLDT appealed the regularization orders, while JFC said it will also do the same. So far, only the case of PLDT Inc. has been decided by Bello as final and executory on April 24. Bello said a lawyer of JFC told him last week that JFC has committed to voluntarily regularize 1,000 of their 7,100 workers per year. He said this is still too slow and they may ask JFC to increase the rate of their regualarization. “Maybe if they can regulate 10 percent of the total number of employees, maybe we could accept that,” Bello said.
No chilling effect
Other companies probed by the DOLE are Philsaga Mining and Industry to catch the profiteers or businesses, which ignore the suggested retail price; and the Department of Labor and Employment to convene regional wage boards to check if minimum wages should be increased. These three measures, Roque said, are meant to mitigate the effects of TRAIN and the weakening peso. Alvarez said, meanwhile, the passage of the national ID system will hasten implementation of conditional- and unconditional-cash transfers, as it would be easier to pinpoint the beneficiaries.
Senate awaits House action
Relatedly, Senate President Vicente C. Sotto III said Monday senators will await House action on the proposed suspension of the TRAIN before tackling the counterpart remedial legislation in the Senate. The chamber will abide by the rule that all legislation pertaining to money measures must emanate from the House of Representatives, he said. Sotto, in a text message to the BusinessM irror, pointed out that the proposal to suspend the TRAIN law came from congressmen in last week’s plenary deliberations, as reported over the weekend. The Senate leader made the clarification when asked on Monday if the Senate would back the House proposal to suspend TRAIN revenue impositions. “Tax measures come from the House, so we leave it to their discretion first,” Sotto III added. Concerned congressmen last week aired the proposal to suspend the TRAIN law’s higher tax impositions amid spiralling prices of basic commodities. House Committee on Ways and Means Chairman Rep. Dakila Carlo E. Cua signalled support over the weekend for calls to consider suspension of TRAIN tax measures to check price hikes. Lenie Lectura, Butch Fernandez and
Bernadette D. Nicolas
Corp. (6,524); General Tuna Corp. (5,216); Sumi Philippines Wiring Systems Corp. (4,305); Franklin Baker Inc. (Diamond Plant) (3,400); Philipinas Kyohritsu Inc. (3,161); Furakawa Automotive Systems Lima Philippines Inc. (PKI Manufacturing Technology) (2,863); and Magnolia Inc. Barangay San Francisco, Gen. Trias, Cavite (2,248). Rounding up the 20 list of companies with the most number of suspected illegally contracted workers are KCC Property Holdings Inc. (1,802); Sumifru Phi lippines, Cor p. Distr ict 1 (1,687); Hinatuan Mining Corp. (1,673); KCC Mall De Zamboanga (1,598); Brother Industries (Philippines) Inc. (1,582); Ph i l ippi ne A i rl i nes a nd PA L Express (1,483); Nidec Precision Philippines Corp. (1,400); Peter Paul Phil Corp. (1,362); Dolefil Upper Valley Operations
G-33. . .
Continued from A1
meeting in special session since agriculture negotiations broke down at the 11th WTO Ministerial Conference, referred to as MC 11, in Buenos Aires, Argentina, in December last year. The official, who was not authorized to speak for the G-33, told the that BusinessMirror the G-33’s message was clear. “It urged the negotiations to be resumed immediately and to be better structured for sufficient communications in the lead-up to MC-12,” the official said. “The G-33 opined that political will is key to achieving meaningful results.” “The proponents also reminded members of the interests of developing countries and advocated holding dedicated sessions on public stockholding for food security purposes and the SSM [special safeguard mechanism],” the official added. The COA’s May 24 informal open-ended meeting was meant to “lay the groundwork for restarting the farm talks,” five months after the impasse in Buenos Aires. Agriculture Secretary Emmanuel F. Piñol confirmed to the BusinessMirror that Manila shares the G-33’s position, especially in the establishment of the special safeguard mechanism (SSM). “On SSM, yes, definitely,” Piñol said via SMS on Monday. In January, he had vowed to make sure the matter is tackled anew in 2018 after the breakdown of negotiations.
CCT funds. . . Continued from A1
Further, PIDS senior research fellow Roehlano M. Briones also said there is no evidence that the decline in agriculture employment is caused by farmers leaving agriculture because of the 4Ps. Briones added that farmers also benefit from the 4Ps because receiving the assistance means they have to ensure their children go to school and are healthy, as well as make sure pregnant women undergo regular checkups. “It provides cash for them, so it is a big help, plus it incentivizes schooling and health-service consumption,” Briones said. In a recent public Facebook post, PIDS senior research fellow Jose Ramon G. Albert said the CCT is not a dole-out, as it encourages capacity development in households. Albert noted a “sunset provision” when it comes to the CCTs, since families receiving the 4Ps “graduate” from the assistance when children complete high school. He said even international experts do not view CCTs as doles, owing to the conditions tied to the assistance. “There is no evidence that cash transfers make the poor lazy...many of the mothers of Pantawid child beneficiaries I talked with [several of them have husbands who are farmers] are very industrious, and the 4Ps even empowered them. They cant be lazy, as the money is too small—a maximum of P2,000 monthly, which is very little,” Albert said. University of the Philippines School of Statistics Dean Dennis Mapa earlier said that the CCT is not enough to keep a family out of poverty, since it only accounts for about 15 percent of the annual
( D u v o) (1 , 1 8 3) ; a n d D o l e Stanfilco (1,131). Bello said SM Mall, which also have alleged cases of LOC, was not included in the list after it committed to regularize 10,000 contractual workers before the end of the year. The release of the list was not meant to put the concerned companies in a “bad light,” but rather to show the government is doing its job in implementing the law on contractualization, Bello said. “It is just to emphasize the concern, not only of the President but also our department to respect the security of tenure of our workers,” Bello said. “If they comply [with our regularization order], we will also announce they finally comply,” he added. He assured investors the campaign against LOC will not extend to those who follow the law. “Why would this create a chilling ef‘[The SSM] is our gift to Filipino farmers. And we urged the WTO Secretariat [at MC-11] that SSM be [made] part of the issues to be tackled this year.” The country’s farm chief was part of the Philippine delegation to the MC-11, which pushed for the creation of an SSM or an improved special safeguard (SSG) to protect small-scale farmers from the detrimental effects of cheap foreign agricultural imports. However, as the MC-11 reached its conclusion last December 14, the 164 WTO member-countries failed to come up with a firm ministerial decision on agriculture as they expressed divergent views on issues, such as SSM and public stockholding for food security purposes. The SSM is a scheme that would allow developing countries and leastdeveloped countries to protect their farm sectors from harmful importsurges by temporarily increasing their tariffs on agricultural products. The WTO defines public stockholding as a “policy tool used by governments to purchase, stockpile and distribute food when needed.” However, public stockholding became a contentious issue at the WTO as some government purchased food “at prices higher than market prices,” which other member-countries consider as a form of subsidy. The BusinessMirror source said that during the COA meeting, China supported the coalition’s position on farm talks. China, which is also a member of G-33, argued that “agriculture issues, particuhousehold poverty threshold. Based on the 2015 Family Income and Expenditure Survey (FIES), the annual per-capita threshold in the Philippines is P21,753. But a Metro Manila resident needs P25,007 annually to keep out of poverty. PSA data showed a family of five needs at least P6,329, on average, every month to meet the family’s basic food needs and at least P9,064, on average, every month to meet both basic food and nonfood needs. In a 2017 study titled “Pantawid Pamilya Pilipino Program: Boon or Bane?” PIDS senior research fellows Aniceto Orbeta and Vicente Paqueo raised warning bells over higher than necessary CCT grants, as this could lead to a culture of dependency among recipients. The authors recommended that the government first pilot a study of various cash grants before deciding on granting higher CCT amounts. “Much bigger grants, however, can change the household calculus in ways that would lead to the weakening of work ethics and the emergence of dependency on government, as critics have warned,” Orbeta and Paqueo said. The authors said that, while arguments supporting increased cash grant amounts for beneficiaries could enhance the impact of the CCT program, increasing the amount without studying the impact of various levels of cash grants “would be risky.” The authors said that, while the CCT has not eradicated child labor—the grants are insufficient to remove the practice—it has significantly contributed to its decrease. In terms of health, the study found more children undergoing growth monitoring and receiving deworming pills, vitamin A and iron supplementation. Further, more mothers received antenatal and postnatal care from health-care professionals.
fect when we are only trying to do what the law provides? This will only have a chilling effect if you are a violator.”
More inspectors
THE DOLE admitted there could more LOC cases in the country, but which they have yet to identify for lack of manpower. Their 574 labor inspectors were only able to inspect 99,526 of the 900,000 companies nationwide in the last two years. “That is why in our report to the President we asked for an additional [2,000] inspectors because it is currently physically impossible for 574 inspectors to inspect 900,000 establishments,” Bello said. Bureau of Work ing Condit ion s D i rec tor M a . Teresit a Cucueco said they will submit another list to Malacañang once t hey get upd ates f rom t heir regional offices. Samuel P. Medenilla larly food security and rural development issues, were critical for economic development” of the negotiating bloc, the official quoted Beijing’s representative as saying. Furthermore, China emphasized that the Nairobi mandates, including PSH and SSM, should be on top of the agenda once negotiations resume, according to the official. Washington, however, immediately rejected the resumption of farm talks at WTO, as “the reflection period is not over and stressed the need to examine American farmers’ situations to better understand the issue.” The European Union backed the US in eschewing artificial deadlines on the negotiations, the official added. COA Special Session Chairman John Ronald Dipchandra Ford is set to organize a dedicated session on priority topics on agriculture raised by WTO membercountries during the meeting, said the source. These farm issues include: domestic support, market access, export competition, export restriction, cotton, PSH, and SSM. Ford believes the WTO membercountries’ “hard work, dedication, and flexibility in all sides” would allow them to achieve progress on farm talks amid divided views on a lot of issues, added the source.“The chair said the difficult environment should not discourage our engagement.... With hard work, dedication, flexibility on all sides, we should be able to agree on how we proceed, close the gaps on negotiating issues and will certainly give ourselves a fair chance of achieving an outcome at MC-12 and beyond."
TRAIN law’s. . . Continued from A1
nationwide. Prompted by the bill’s filing, the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) called for a P800 daily wage, a proposal the Ecop immediately rejected.
Unrealistic ECOP Chairman Edgardo G. Lacson said employers find the 56-percent wage-hike proposal “unrealistic” for a number of reasons. Only a pocket of the millions of Filipino workers will benefit from the wage increase sought by the ALU-TUCP. “Less than 8 percent, or 3.2 million workers out of the total labor force of 41 million, will benefit from [a] minimum wage hike,” he said in a text message. “The pain of inflation will worsen the plight of the 92 percent wage earners who are excluded, mostly employees of SMEs [small and medium enterprises].” Lacson said “the law provides two fundamental justifications for a minimum wage hike,” of which the first is the depreciation of the peso and its purchasing power due to inflation, and the second being the capacity of employers to pay. “Granting a 4.5- percent inflation rate, then the mathematical computation will yield only a P23 per day minimum-wage increase, not a P288 per day [hike] demanded by labor,”he explained. “Then, various industries in a public hearing conducted by the wage board will determine the capacity of employers to pay.” Elijah Felice
E. Rosales and Jovee Marie N. dela Cruz
The Nation BusinessMirror
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Surge in traffic violations noted
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he Transportation department views the 99-percent spike in road apprehensions in the first four months of the year as a poor reflection of Filipino motorists’ tendencies to ignore simple traffic rules and regulations. Data from the Inter-Agency Council for Traffic (i-ACT) showed the government apprehended a total of 4,132 traffic violators from January to May. The agency compared this figure to the 1,379 apprehensions in the last four months of 2017. “With i-ACT’s intensified and wider scope of operations, we are able to double our apprehensions compared to last year’s. Though it is a significant achievement for us, it is also a bit disappointing to see the number increase as years go by,” Transportation Undersecretary Thomas M. Orbos said on Monday. He added the agency expanded its coverage from Metro Manila to include the provinces of Cav ite, Lag una, Bu lacan and Rizal, after the program’s relaunching in last September. Traffic situation in these areas greatly affected the traffic condition in Metro Manila, he said. A lso included in the areas served by the group are Pampanga, Boracay, Caticlan, Davao, Cebu and Pangasinan. Orbos vowed to undertake intensified operations against illegal parking, colorum and out-of-line vehicles, and illegal terminals. He added the agency will also intensify its anti-fixer and anti-fake driver’s license and fake vehicle plates operations. Sharmaine O. Paden
Editor: Vittorio V. Vitug • Tuesday, May 29, 2018 A3
Original land titles with LMB not damaged by Binondo fire
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By Jonathan L. Mayuga
@jonlmayuga
he Department of Environment and Natural Resources (DENR) has assured the public that all original land records with the Land Management Bureau (LMB) are safe and secured, in the wake of a fire that scorched a building housing the LMB office in Binondo, Manila, on Monday morning.
The LMB office is located inside the Plaza Cervantes Building along Quintin Paredes Street in Manila. DENR Undersecretary for Solid Waste Management and Local Government Concerns Benny Antiporda told a news conference in Quezon City that the LMB office in Binondo only archives digitized land records coming from the regional offices. The fire was reported shortly around 12 midnight and firefighters are still struggling to contain it as of this writing. The conflagration has affected three nearby buildings, namely, the Bank of the Philippine Islands Condominium Corporation Building, Moraga Mansion and the Pacific Commercial Company Building that
houses some offices of the National Archive of the Philippines, according to a CNN Philippines report. Antiporda said initial estimate of the damage caused by the fire was at P100 million. The LMB is a line bureau of the DENR that recommends policies and programs for the efficient and effective administration, management and disposition of alienable and disposable lands of the public domain and other lands outside the responsibilities of other government agencies. All digitized land records from the different regions are sent to the LMB as part of a project initiated by then-Environment Secretary Ramon J.P. Paje.
A fire of unknown origin on Monday hit the Land Management Bureau office in Binondo, Manila, where the National Archives of the Philippines office is also located. ROY DOMINGO
Under the project, all land records are scanned and digitized—and sent to the LMB, which serves as the central repository of all the records. All original records are still safe and sound as the DENR Regional Offices
are also tasked to keep them safe, Antiporda clarified. However, he said, it will take the DENR some time to rebuild its database of land records because they will have to request from the regions and
start compiling all digitized information from the regions. “As far as I know, the digitization program is about 70 percent to 80 percent complete. With the fire, we will have to start again from zero,” he said.
A4 Tuesday, May 29, 2018 • Editor: Vittorio V. Vitug
Economy BusinessMirror
Regional wage boards to convene next week
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By Samuel P. Medenilla
@sam_medenilla
he surge in international oil prices and the implementation of the tax-reform law have prompted the Department of Labor and Employment (DOLE) to finally order the regional wage boards to determine the feasibility of hiking the minimum wage rate. In a news briefing on Monday, National Wages and Productivity Commission (NWPC) Executive Director Criselda R. Sy said the DOLE will convene the Regional Tripartite Wages and Productivity Boards (RTWPB) in 10 regions on June 5 to determine if they could declare a “supervening condition” to exempt them from the one-year ban in issuing a new wage order. The meeting will be attended by representatives from the Bangko Sentral ng Pilipinas, National Economic and Development Authority, Departments of Trade, Energy and of Agriculture, and the Land Transportation Franchising and Regulatory Board. “If the commission will confirm their declaration [of a supervening event], a new order may be issued in the next 30 days,” Sy said. “The wage
hike may be for a certain period only, like in the past. It will be based on their assessments.” She clarified the declaration will be on “case-to-case basis” for each region. Sy said factors that will determine the declaration of a supervening event include not only prices of basic goods and services, but also the implementation of the government’s “mitigating measures” to mitigate the impact of inflation. These mitigating measures include the subsidy for jeepeney drivers, cash aid for the poor and the tariffication of rice import caps. DOLE Undersecretary Ciriaco A. Lagunzad III said the RTWPBs have declared a supervening event four times: in 1991 during the Gulf War; in 2005 following the hike in value-added tax; and in 2008 and in 2011 because of the spike in oil
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and rice prices. “In all those are actual conditions that were evaluated and these should translate to an extraordinary and sudden increase in inflation,” Lagunzad said. Under Republic Act 6727, or the Wage Rationalization Act of 1989, the RTWPBs could only issue a new wage order a year after their previous wage order unless there is a supervening event. A supervening event is any extraordinary increase in basic goods, such as petroleum, and services for a given period, which is usually for three straight months.
Fast-track consultations
Labor Secretary Silvestre H. Bello III also ordered the RTWPBs in six regions that are no longer covered by the one-year ban to fast-track consultations for hiking the minimum wage. These regions are Central Luzon, Western Visayas, Central Visayas, Eastern Visayas, Zamboanga Peninsula and Davao region. “We are doing this to provide daily wage earners the capability to cushion the impact of spiraling prices, if not totally recover the lost value of their income,” Bello said. Currently, the RTWPBs have already received new petitions to hike wages in Regions 6, 7 and 11. Sy said the concerned RTWPBs “are currently in different stages of consultations and are well on their way to conducting their public hearings.”
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By Henry J. Schumacher
he European Union General Data Protection Regulation is a comprehensive set of rules designed to keep the personal data of all EU citizens collected by any organization, enterprise or business safe from unauthorized access or use. The GDPR went into effect on May 25, and the provisions in the law will greatly affect the manner in which every business transaction involving European Union citizens is conducted from that point forward. Provisions in the GDPR grant the EU the authority to enforce the regulations across international borders. That means a small 20-person company in Texas that collects personal data from a customer residing in Paris in order to sell and ship a cowboy hat will be subject to the security provisions of the GDPR—and, more important, will be liable for any penalties imposed for not following those provisions. There are no exemptions for size, scope, location or first offenses. Fail to meet the provisions of GDPR and you will incur penalties.Organizations that ignore the GDPR are opening themselves up to uncertain liability, substantial risk and potential financial hardship. The gravity of the GDPR would suggest a prudent course of action is re-
quired, including establishing procedures, protocols and policies that address and meet the requirements of the law. This EU General Data Protection Regulation Policy will give you a head start on building guidelines that fit your company’s circumstances. The Data Privacy Act (DPA) of the Philippines, which is enforced by the National Privacy Commission (NPC), is equally comprehensive, designed to keep the personal data of Filipinos collected by various organizations and business safe from unauthorized access or use. As part of its commitment to increasing understanding in Philippine-European relations, European Innovation, Technology, and Science Center Foundation (EITSC) commissioned Mr. Dondi Mapa to author a paper which compares the provisions of the GDPR and the DPA and highlights the areas where both are aligned and where there are differences. Damian “Dondi” Mapa is an expert in information and communications technology and public policy. In 2004 he was appointed to the Commission on ICT by President Gloria Macapagal-Arroyo. In 2016 he was appointed to the National Privacy Commission, (NPC) by President Benigno S. Aquino III. He is a co-author and signatory of the implementing rules and regulations of the Data Privacy Act of 2012, as well as various NPC circulars and advisories. He is also a past member of EITSC’s Board of Trustees. In his “White Paper,” Dondi states that “it should not come as a surprise that the Data Privacy Act is closely patterned after the European Union’s General Data Protection Regulations. In fact, I would assert that any Philippine company that is fully compliant with the DPA and related issuances is over 90 percent compliant with the GDPR. A corollary to this would be that Filipino data protection officers would naturally be highly proficient in performing GDPR-compliance roles.” To prove this assertion, I have compiled a pointby-point comparison in the sections below. Please note that my thesis is not that the DPA is the Philippine version of the GDPR, but rather that the DPA is a Philippine implementation of the GDPR—in alignment with Recital 8 of the GDPR: “States may, as far as necessary for coherence and for making the national provisions comprehensible to persons to whom they apply, incorporate elements of this Regulation into their national law.” This White Paper can be reviewed on the web site of EITSC— www.eitsc.com —under Announcements/News. Allow me to add that EITSC is offering an online Data Protection Management System (DPMS) which is capable to identify your compliance or noncompliance with both laws.
Comments are welcome—contact me at Schumacher@eitsc.com.
Amid regional board reviews, experts push ₧800 hike, weigh wisdom of national wage
E
VEN workers earning above the minimum wage would benefit from the proposed P800 nationwide wage hike from labor groups, as this would give them a basis for seeking higher pay to avoid a wage distortion, labor advocates said over the weekend. They advanced the view after higher officials directed the regional wage boards to start reviewing the rates in their respective regions, and a former labor undersecretary said the clamor to revert to a national, from the current region-wide wage setting, is a complicated initiative. In an interview, Trade Union Congress of the Philippine (TUCP) Assistant General Secretary Vicente C. Camillion Jr. told the BusinessMirror the measure, if granted by the Regional Tripartite Wages and Productivity Boards (RTWPB), will cause a wage distortion. The Department of Labor and Employment (DOLE) defines a wage distortion as a “situation where a legislated increase in minimum wages results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment so as to effectively obliterate the distinctions.” “This will allow those earning above the minimum wage to negotiate for higher pay,” Camillon pointed out. The TUCP official issued the statement after President Duterte and Labor Secretary Silvestre H. Bello III ordered the RTWPBs last week to review their existing wage rates. However, even without instructions from its high-ranking officials, the National Wages and Productivity Commission (NWPC) reported the RTWPBs have already started reviewing their existing wage rates since it is part of their
yearly mandate. In fact, the RTWPBs in three regions—Western Visayas, Central Visayas and Davao region—are already processing the wage petitions submitted to them by concerned parties. Latest data from NWPC said 59 percent (181) of the 308 wage orders it issued since 1990 were issued motu proprio, while only 41 percent (127) was based on wage petitions.
National, not region-wide wage: Not quickly doable
The Associated Labor Unions (ALU), an affiliate group of TUCP, has been urging the RTWPB to implement a “synchronized” P800 nationwide across-the-board wage hike to allow minimum-wage earners to cope with the impact of the first tranche of the Tax Reform for Acceleration and Inclusion (TRAIN) law. ALU-TUCP blamed the rising cost of living on TRAIN and increases in the prices of crude in the international market. “Because of these forces, the value of P512 daily minimum wage fell by P186 every day. The buying power of P512 is now only P326 a day,” ALUTUCP Spokersman Alan Tanjusay said, referring the to daily minimumwage rate in Metro Manila—currently the highest nationwide. He said the P800 will raise the real wage of workers to P1,200, which he said is the minimum amount for a family of five to live above poverty. “The government must now mitigate the worsening plight of workers and their families by providing safety nets while employers, on one hand, must immediately provide a substantial wage increase and save workers from falling into deeper destitution,” he added. Partido Manggagawa Chairman Renato Magtubo agreed with the proposal of ALU-TUCP, but add-
ed it should be only a temporary measure until the government can restore its minimum wage-fixing mechanism to nationwide, from its current region-based. Magtubo said the RTWBs should be abolished for failing to grant workers a significant wage hike. “For the past three decades, wage orders by the regional boards are so low that, at present, [they] cannot offset the impact of the rising cost of living brought about by the TRAIN law and profiteering by unscrupulous employers,” Magtubo said. He added region-based minimum- wage setting is also discriminatory to workers since it violates the principle of equal “pay for work of equal value.” “Differentiating wage rates on the geographical location where a worker works is absurd. Why would an equally capacitated carpenter differ in minimum-wage rate in a construction firm because one works in Quezon City and the other in Bulacan?” Magtubo asked.
Legislated reform
Former Labor Undersecretary and University of the Philippines labor expert Rene Ofreneo, however, said the proposal will need to undergo legislation. He said the Wage Rationalization Act of 1989 designates the RTWPBs in the issuance of wage orders nationwide. Prior to the passage of the said law, the national minimum wage was determined by Congress. “Things will not be that easy [for a nationalized minimum wage]. If labor groups want to push for one, they would have to unify and lobby for it [in Congress],” Ofreneo said in a phone interview. Magtubo and Camillon said labor groups are already preparing their respective studies supporting the pending bills. Samuel P. Medenilla
The World BusinessMirror
www.businessmirror.com.ph
Editor: Lyn Resurreccion • Tuesday, May 29, 2018
A5
Budding Moon-Kim bromance poses risk to Trump pressure drive
W
hen Donald J. Trump abruptly scrapped their planned summit, Kim Jong Un sought out someone he knew would come over for a chat: South Korean leader Moon Jae-in.
Moon’s surprise meeting with Kim last Saturday shows he’s willing to do what it takes to keep diplomacy on track and avoid a return to threats of war over North Korea’s nuclear program. Moon called the gathering a meaningful attempt to clear up “some difficulties in communication” as the two leaders shared warm words on the northern side of their border. More significantly, Moon secured the restart of minister-level interKorean talks on June 1, followed by a dialogue between military leaders and a Red Cross meeting to reunite families separated by the war. A United States delegation was in North Korea to prepare for a potential Trump-Kim summit, the State Department said last Sunday. Pyongyang, which canceled the talks earlier this month in a sign of reemerging tensions, said the two leaders agreed to “meet frequently in the future.” Moon pledged to visit Pyongyang later this year. For now, Moon has maintained an appearance as a neutral middleman who can bridge the gap between Trump and Kim, two reactive leaders who create a high risk of miscalculation. Yet over the longer term, Moon’s desire to cut a peace deal with North Korea during his single five-year term means Trump could find it harder to enforce his “maximum pressure” campaign if talks break down again. “There is a fine line between being an honest broker and being the North’s accomplice,” said Ralph Cossa, president of Pacific Forum in Honolulu. “There are some in Washington who are seeing Moon as the latter and this builds upon the distrust that any progressive leader carries with him.” Kim has now separately met Moon and Chinese President Xi Jinping twice in the past three months, and both leaders have pledged to strengthen ties with his regime. South Korea and China account
briefs
Trump warns: shutdown as budget battle heats up
WASHINGTON—President Donald J. Trump has warned Congress that he will never sign another foot-tall, $1 trillion-plus government-wide spending bill like the one he did in March. His message to lawmakers in both parties: Get your act together before the next budget lands on my desk. After a brief government shutdown earlier this year, Democrats and Republicans now agree on the need for budgeting day-to-day operations of government the old-fashioned way. That means weeks of open debate and amendments that empower rank-and-file lawmakers, rather than concentrating power in the hands of a few leaders meeting in secret. The worst-case scenario? A government shutdown just a month before Election Day, November 6, as Republicans and Democrats fight for control of the House and possibly the Senate. Trump is agitating for more money
for almost all of North Korea’s land borders, so their support is essential for enforcing sanctions ramped up last year after Kim declared the ability to strike the US with a nuclear weapon. “With South Korea and China already talking to the North, it’s hard for Trump to reignite his campaign at this point or after the summit fails,” said Namkoong Young, who has advised South Korea’s Unification Ministry and the Foreign Ministry on policy for almost 10 years. Trump’s team believes the maximum-pressure campaign to strangle North Korea’s economy is working, and Kim’s regime will have to come to the table eventually, according to a person familiar with the administration’s thinking. North Korea’s push to get the summit back on track shows that it’s probably looking for sanctions relief, even as Kim retains concerns about his own security.
Differing approaches
Even so, Trump has clashed with both China and South Korea over the best approach to dealing with Kim, as well as on issues like trade. Before canceling the summit last week, Trump said that China had eased up enforcement of sanctions on its border. Bloomberg News reported last Friday that China is still severely restricting cross-border trade, although optimism is growing that commerce will once again increase. China, South Korea and the US all back denuclearization of the Korean Peninsula, but differ on how to make that happen. The Trump-Kim summit hit a
snag after North Korea lambasted Vice President Mike Pence and National Security Adviser John Bolton for suggesting it give up its nuclear weapons before receiving anything in return—the so-called Libya model.
Trust issue
Libyan dictator Moammar Qaddafi agreed in 2003 to give up his weapons of mass destruction, including nuclear arms, in return for sanctions relief. He ended up getting killed at the hands of US-backed rebels less than a decade later. “Chairman Kim clearly appealed once again that his intent to completely denuclearize the Korean Peninsula is firm,” Moon said. “What’s unclear for Chairman Kim, in my opinion, is not his willingness for denuclearization, but whether he can certainly trust the US saying that it’ll end hostile relations and guarantee the security of his regime after his denuclearization.” In a conciliatory statement last Friday aimed at getting the summit back on track, North Korea said it favored a “Trump formula” to resolve tensions and praised the president for agreeing to meet Kim. His regime has couched denuclearization in global terms and called for a step-by-step process, saying it would have no need for nuclear weapons once its leadership felt secure. Still, there’s no sense of a consensus yet on denuclearization. Moon sidestepped a question last Sunday on whether Kim clearly mentioned if he would agree to the US demand for complete, verifiable, irreversible denuclearization, saying that the two sides would need to discuss it at working-level talks. The US-South Korea alliance could take a hit if Moon intentionally exaggerated Kim’s commitment to denuclearization, according to Namkoong, who also teaches interKorean politics at Hankuk University of Foreign Studies. “The stakes of this summit are big,” he said. “If the TrumpKim summit succeeds, Moon will win big. If it doesn’t, he will lose a lot.” Bloomberg News
With South Korea and China already talking to the North, it’s hard for Trump to reignite his campaign at this point or after the summit fails.”—Young for his long-promised border wall with Mexico. So far, he has been frustrated by limited success on that front. AP
Spain’s divided opposition struggles to oust Rajoy Spain’s Socialists are facing an uphill task in reconciling differences between opposition parties as they seek to garner support for dislodging Prime Minister Mariano Rajoy. The no-confidence motion filed on May 25 by the Socialists, the largest opposition group, needs the backing of several other parties to succeed. The trust vote request, triggered by the sentencing last week of a former official of Rajoy’s People’s Party in a corruption scandal, will be placed before a cross-party parliamentary party board on Monday. The centrist Ciudadanos, an occasional ally of the Rajoy government, wants the motion to be called off and favors fresh elections. The Basque nationalists, meanwhile, are seeking a promise that a Socialist administration would grant their demand for self-government in the region as a
condition to get their assistance, and the Catalan nationalist group PdCat said they wouldn’t be caught on the same side as Ciudadanos in removing Rajoy. Bloomberg News
Storm Alberto strong as it approaches Gulf CoaST SAINT PETERSBURG, Florida—Subtropical Storm Alberto has gained an early jump on the 2018 hurricane season, heading toward expected landfall sometime on Monday on the northern Gulf Coast. Though the Atlantic hurricane season doesn’t officially start until on Friday, Alberto has become the first named storm this year, throwing disarray into long holiday weekend plans along Florida’s Gulf Coast. The National Hurricane Center in Miami said at 2 a.m. EDT on Monday that Alberto was maintaining its strength as it approached the Florida panhandle and was centered about 185 kilometers south-southwest of Panama City. The storm had maximum sustained winds of 100 kph as it approached the northern Gulf of Mexico. AP
New Zealand to kill 150,000 cows to end bacterial disease
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ELLINGTON, New Zealand—New Zealand plans to slaughter about 150,000 cows as it tries to eradicate a strain of disease-causing bacteria from the national herd. Politicians and industry leaders announced the ambitious plan on Monday. They say it will cost hundreds of millions of dollars, and, if successful, would be the first time an infected country has eliminated Mycoplasma bovis. Farming is vital to the economy in New Zealand, whose isolation has helped protect it from some diseases which affect herds elsewhere. Last July Mycoplasma bovis was found in the country for the first time. Found in Europe and the US, the bacteria can cause cows to develop mastitis, pneumonia, arthritis and other diseases. They are not considered a threat to food safety, but do cause production losses on farms. Officials say they plan to kill all cows on any farms where the bacteria are found, even if some of the animals are healthy. They say many of the cows will be slaughtered at processing plants and used for beef, but some cows will have to be killed and buried on the farms or dumped
in approved landfills. Officials have the legal authority to forcibly enter farms and kill animals even in cases where a farmer might resist, but they said they hope they don’t have to use those powers. Katie Milne, the national president of the advocacy group Federated Farmers, said it was important to try to get rid of Mycoplasma bovis while there was still a chance. She said they would try to make sure affected farmers had all the support they needed, including adequate compensation. “This is a tough time, and the pain and anguish they’re going to go through is really hideous,” she said of the affected farmers. “And we have to support them as neighbors, community members, farmers, friends.” New Zealand is home to some 10 million cows, about double its human population. About twothirds are dairy cows and the rest beef cattle. Milk products represent the country’s largest single export, and much of it is sold to China and used in infant formula. Mycoplasma bovis has so far been found on 38 farms throughout New Zealand, officials say, a number they
expect to rise to at least 142 farms based on computer modeling. They say all the infections found so far can be traced back to a single farm, and that the bacteria likely arrived in New Zealand 18 months before they were first identified. Officials are still trying to figure out the bacteria got into the country, despite strict biosecurity controls. About 24,000 cows have already been killed in recent months and at least 128,000 more will have to be culled, most over the next year or two. The cost of the eradication program is estimated at NZ$886 million ($616 million) over 10 years. The government plans to pick up about two-thirds of the tab while farmers and the cattle industry will pay the rest. Prime Minister Jacinda Ardern said she believes it’s still possible to eradicate Mycoplasma bovis. “We don’t know, in the long term, what impact it could collectively have on an industry that is incredibly important to New Zealand’s economy,” she said. “So if we have an opportunity to be the country that eradicates this disease, then we’ll take it.” Officials say they expect to know by the end of the year whether the eradication plan is working. AP
Eyes on Italy’s president after he vetoes populists’ choice
R
OME—All eyes are on Italian President Sergio Mattarella after he vetoed the proposed eurosceptic economy minister of what would have been Western Europe’s first populist government. News reports said Mattarella would convene the former Inter-
national Monetary Fund official, Carlo Cottarelli, to the presidential palace on Monday and ask him to form a technical government that can lead Italy until early elections. Markets have largely welcomed Mattarella’s decision to put an end to the proposed government of the anti-establishment 5-Star Move-
ment and right-wing nationalist League, which had insisted on Paolo Savona as economy minister. Savona has questioned whether Italy should ditch the euro as its currency. The spread of points between Italy’s bonds and benchmark German bonds, which had grown alarmingly last week, fell early on Monday. AP
A6 Tuesday, May 29, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
www.businessmirror.com.ph
editorial
Still land reform
T
alk of land reform is back on the government’s agenda, with the Duterte administration eyeing to extend the coverage of the Comprehensive Agrarian Reform Program (CARP) to cover more private and public agricultural lands and go beyond what were already distributed by the government to landless Filipino farmers through previous agrarian-reform programs. This was featured in the BusinessMirror’s special report, “Giving land to farmers: ‘Quousque tandem’?,” written by Jonathan L. Mayuga and published on May 17.
It was former President Corazon C. Aquino who institutionalized the distribution of land to small landless farmers as a policy through the enactment of the CARP law on June 10, 1988. It was the centerpiece of her administration’s social-justice program. The CARP was extended in 1998 for another 10 years or until 2008. In 2009 the CARP was extended anew for another five years, or until June 30, 2014, through Republic Act (RA) 9700 or CARPer. To be still talking about it and trying to implement the land-distribution program today, almost 30 years after it was started, is proof of the many controversies and obstacles surrounding government’s efforts to distribute land to tenant farmers. Despite all the flaws in the CARP’s implementation, however, we believe in the law’s objective to help small landless farmers attain economic self-sufficiency. We do hope President Duterte would take full advantage of the opportunity to complete land distribution under his term. However, data from the Department of Agrarian Reform (DAR) show that, as of 2018, there are still 561,131 hectares of both public and private agricultural lands that remain undistributed, which it says will take at least a decade to distribute at an annual distribution target of 50,000 hectares. Distributing what remains to be distributed is easier said than done, said DAR’s David Erro, who spoke of the usual resistance from landowners who hire lawyers or use legal remedies to derail the process of land acquisition and distribution. In many cases, it takes a decade or more before an issue is resolved—either by the DAR Adjudication Board or the courts. Even worse, these cases often end up being archived at the Supreme Court. A total of 4,857,604 hectares of private and public agricultural lands have been distributed by the government so far, most through CARP and CARPer, and the Duterte administration is looking to up the ante by identifying unclassified public lands that may be converted into agricultural land for distribution through the strength of a presidential proclamation, and also by parceling out government-owned agricultural lands assigned to or under the name of various government-owned and -controlled corporations, agencies or institutions, including civil and military reservations. As for privately owned titled agricultural land, it needs another CARP extension law similar to RA 9700. Of course, the agrarian-reform program’s success doesn’t end with just giving away land titles to small landless farmers. Having possession of land alone will not solve the problems of peasants in the countryside. First, they must be able to keep these lands and make a decent living off of them. The government must help them become productive, help them get credit for their farms for the purchase of seeds, fertilizers and other equipment, help them market their produce and acquire good farming techniques from cooperatives and agriculture schools. The government must also fill up gaps in agriculture infrastructure, especially in irrigation and farm-to-market roads. In short, the government must help the CARP beneficiaries become successful farmer-entrepreneurs. The government must preach the gospel that farming is where the money is and make the country’s mostly old and poor farmers believe in it simply because it is or could be true. This will encourage more people, especially young people, to stay in their farms, take up farming and see agriculture as a worthwhile entrepreneurial venture. Only then could agrarian reform truly help alleviate poverty and improve food security in the country.
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Manny B. Villar
THE Entrepreneur Continued from A1
T
he Philippine economy, in fact, has been growing in the last 20 years and has not experienced a contraction during this long period. It is, thus, safe to say that we have moved out of the boom-and-bust cycle that once characterized the Philippine economy, especially during the 1980s and 1990s when crisis after crisis, both caused by political distractions and natural disasters, disrupted our everyday life. I expect the Philippine economy to sustain this strong growth momentum in the next 10 years, or the remaining four years of President Duterte’s term and the full six-year term of the next president. The next chief executive will be lucky in terms of economic management because he or she will inherit a strong economy. It is easier to push the economy higher when the growth momentum is on your side. Data from the PSA show that the Philippines registered an uninterrupted growth pattern since 1999. The economy nearly contracted in the first quarter of 2009 when GDP
growth was registered at just 1 percent. But the economy bounced back strongly in the succeeding years, expanding at a range of 5 percent to nearly 8 percent every quarter. The economy is on an extended winning streak, and I see it growing further in the coming years. At the rate the Philippines is growing, our economy may catch up with Thailand and achieve an upper middle-income status in two years from a lower middle-income economy, as Economic Planning Secretary Ernesto Pernia earlier predicted. This means our gross national income per capita will be between $3,956 and
$12,235 as calculated by the World Bank compared with lower middleincome economies, or those with a GNI per capita of between $1,006 and $3,955. Mr. Pernia noted that the firstquarter growth of 6.8 percent was the 10th consecutive quarter that the economy was able to achieve an output expansion of 6.5 percent or better. The growth, according to him, was on a par with market expectations and close to the low end of the government’s full-year growth target of 7 percent to 8 percent for 2018. The economy could have expanded faster, if inflation was more subdued for the period. Inflation in the first quarter averaged 3.8 percent based on the 2012 price index, near the upper limit of the target range of 2 percent to 4 percent for the year. But the economy for sure is poised to expand more as the government accelerates its “Build, Build, Build” infrastructure program and increases its revenues through the Tax Reform for Acceleration and Inclusion, or the TRAIN law. Building more roads, railway networks, airports, bridges and ports across the country directly generates more jobs. This, in turn, fuels consumption as more people join the labor ranks and spend more. The manufacturing and services sectors,
Stay away from the stock market
T. Anthony C. Cabangon
Editor in Chief
Senior Editors
Growth momentum
John Mangun
OUTSIDE THE BOX
O
n June 16 Asian Invest will be conducting a seminar, titled “Change the Way You Trade the Market,” at the BGC Arts Center in Bonifacio Global City. I will be speaking on “Stock Market Investing and Other Bad Habits”.
No, my topic is not “Bad Habits in Stock Market Investing.” After more than 40 years in this game, investing can easily be a bad habit that many people need to stop doing just like spending too much time watching Internet porno. Since January the Philippine Stock Exchange Composite Index (PSEi) reached a historic high of around 9,000 and has come down to around 7,600. To listen to some of the comments in the press, media and especially on social media, you would think that this is the equivalent of the People’s Liberation Army invading and taking over one of the “girlie” bars on Roxas Boulevard.
The PSEi is down 16 percent. That is the equivalent of the Chinese Minister of National Defense General Wei Fenghe asking to see a map of Asia. It means nothing. But many investors have seen the value of the stock portfolios go down, even significantly. Stock-market performance is like everything in life. It is all a matter of perspective. Former US President Harry S. Truman said, “It’s a recession when your neighbor loses his job; it’s a depression when you lose your own.” The key date, if you are keeping track, is the week ending April 13 as the PSEi broke below a key price and psychological level at 7,900. The
reason this price level was so important is that it confirmed that the drop below PSEi 8,000 was not a “mistake.” Granted there have been some big losers. Primex Corp. is down about 40 percent. Starmalls, Melco Resorts, Easycall Communications, and Pxp Energy have stock prices off more than 20 percent. But then again, of second-liners, there are also winners. Now Corp. has gained 26 percent, and Vitarich Corp, Transpacific Broadband, Lt Group and SM Prime Holdings are all 12 percent to 15 percent higher. However, the lesson that might be learned is that if your stock portfolio seems to be in a “depression” more than you would like, maybe it is time to break your bad habit. The belief that stock-market investing is for absolutely everyone— which is the mantra on social media and in many of the “Financial Literacy” seminars—makes the whole thing like a cult religion. And that is being disrespectful to cult religions. Even the most fanatic and extreme cult still believes that there probably should be some sort of qualification to join—maybe a secret tattoo or a sexual desire that other people find a little weird. But for the stock market, all you
meanwhile, will expand their output to meet the increased demand. The economy, sooner or later, will expand further. Our businessmen are very much aware of the current economic boom. They are not just bullish, they are very bullish on the Duterte administration and have announced plans to expand. You can read almost everyday about their investment plans in the business pages of newspapers. Many companies have committed to spend tens of billions of pesos in capital expenditures this year alone. That means more construction, more jobs and more economic activities. The upbeat mood on the economy, of course, is due greatly to good macro economic fundamentals, political stability and the tough stance shown by President Duterte against corruption and the widespread drug problem. I think investors and the public in general appreciate his nononsense style in dealing with the corrupt and the drug menace. The people want to see and hear more of this tough stance. Coupled with political stability, the economy is expected to sustain this high-growth trajectory in the coming years. For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.
have to do to be saved from your financial hell is to buy the book, log in to the web site and put your money on the table. This “religion” promising financial heaven may be the easiest to belong to since the building of the Great Pyramids. Investing in the stock market is a game of skill. You can learn the skills with patience, diligence and time. However, even if you invest a large amount of patience, diligence and time, you may never be successful. Muggsy Bogues was the shortest basketball player in National Basketball Association history at 5 feet, 3 inches, and played for 14 seasons. He established himself as an exceptional passer, a great stealer and one of the fastest players on the court. But he was the only man at 5’3” ever to make the NBA. All the rest of the men his height had no business trying to be an NBA player. Maybe you have no business investing in the stock market. But if you do, see you on June 16. 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.
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Opinion
Have we hit peak trade?
A guide to ascertain the truth
BusinessMirror
Cecilio T. Arillo
database
Paul Donovan
G
lobal trade has surged over the past 25 years. People are trading with one another more than ever before. Global trade today is almost 30 percent of the world economy, in real terms. This measure of globalization has doubled since 1990. However, in recent years the growth of global trade has stalled. In particular, trade in goods (rather than trade in services, like wealth management) has stalled. In fact, the world might have hit peak trade. How did global trade grow?
Making things has become more complex. This helped the surge in global trade over the past 25 years. In the 1970s products tended to be made locally. A country would import some things it could not make itself. If a country does not have oil, it has to import oil (or use other sorts of energy). Oil and other basic goods aside, countries made their own things. Over the last 25 years, countries stopped making everything themselves. Countries now import more than basic goods like oil. Think about music. Someone wanting to buy a compact disk album by a foreign artist is really importing music from another country. However, a second country may make the compact disk. A third country may make the case, using plastics from a fourth. A fifth country may print the cover, using the paper and ink made in a sixth and seventh country. And an eighth country assembles the whole package. Only then does the music fan gets the album. This is why a car “made in the USA” is not really “made in the USA” any more. Over one-third of a car exported by the United States comes from abroad. Global trade will increase every time something crosses an international border. Global GDP only goes up with the final sale. If it takes more trades to make the final product, then trade as a share of GDP will go up. Why might global trade change? There is now evidence that the rapid growth of global trade may be coming to an end, or even moving lower. We may have hit peak trade, at least for trade in goods. It would be easy to blame protectionism for this, but that is only a part of the story. The reason supply chains became more complex was cost. It was cheaper to make some things in some parts of the world. While it did cost money to ship parts from one place to another, lower production costs offset shipping costs. That cost story is less clear now. Local robots can replace foreign labor. The advantage of making things close to the customer is that goods can be made on demand. Rather than waiting weeks for things to travel from the other side of the world, a company can deliver things made locally within days. Making things close to the consumer reduces the risk of making too much (waste is a cost) or too little (missing a chance
to make more money). Other costs may fall. It will cost less to insure expensive finished goods if they are moved over shorter distances. Digitization cuts supply chains even more. This stops any trade in goods. In the last two years how we listen to music has changed. The compact disc is a thing of the past. Today, most music is downloaded or streamed. There is still trade. The artist trades his or her intellectual property. That is, of course, not a good, but a service. The supply chain for music has become dramatically shorter. As supply chains become shorter, trade for goods will be simpler. There are some signs that this is happening already. The trend for more foreign parts in a country’s exports has stalled or reversed since the global financial crisis. With shorter supply chains and simpler trade we may have hit peak trade. If we have hit peak trade there are several things investors need to think about: Countries that have grown by becoming links in longer supply chains will need to come up with new ways of generating growth. Demand for transport will change. Finished products will travel over shorter distances. Raw materials may travel to new locations. Some things (like music) will not travel at all. Making things closer to customers should reduce stocks of goods, or inventory. Inventory can make recessions worse. If things are made closer to customers, the ups and downs of the economic cycle may be less violent. Services and ideas could become more important to future trade than trade in goods. Peak trade for goods does not create lots of new jobs. Peak trade is about robots and digitization. However, peak trade might mean that, over the next 15 years or so, today’s protectionist trends become less significant. Trade wars are fighting battles from the past. The future of trade is going to be different.
Paul Donovan is the managing director and deputy head of global economics of Zurich-headquartered UBS. He is responsible for formulating and presenting the UBS Investment Research global economic view, drawing on the bank’s worldwide resources. Donovan took up philosophy, politics and economics at Oxford University. He holds an MSc in financial economics from the University of London. In the Philippines his column will appear exclusively once a month in the BusinessMirror.
Part One
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O doubt Luis Antonio Cardinal Tagle’s warning that “the country is on the brink of ‘crisis of truth’ and that among its casualties is the common good” is, indeed, appropriate and timely.
“The crisis of truth has sown seeds of suspicion, mistrust and fragmentation. Partisan politics has turned into political ‘tribalization.’ The common good is one of the first casualties,” Tagle said, lamenting, at the same time, the continued spread of fake news in a letter to Manila’s parishes. Tagle said some legal experts gave “conflicting interpretations” of basic questions of law as he declared May 20 to 31 as days of prayer, fasting and action “for truth and common good.” “The country needs renewed outpouring of the Holy Spirit,” Tagle said, ordering the ringing of church bells to commemorate Jesus’ death and the praying of the Chaplet of the Divine Mercy in parish churches, chapels, convents, schools, homes and offices. “We accompany our prayer with fasting. Through fasting we redirect our focus from ourselves and our groups to the community,” Tagle added. In support to Cardinal Tagle’s call, this column humbly provides our readers a guide on how to ascertain the truth. Judges, philosophers, academicians and researchers over the years
have discovered different methods of tests to determine the truth. However, not all of these methods are by themselves sufficient in distinguishing truth from falsehood. Knowing the relative value of each test will help our readers make a choice as to what test they will trust and employ in judging the truth or falsity of information. There are 11 tests of truth widely used by scientists, philosophers and researchers. These are sense perception, feeling, instinct, intuition, customs and traditions, majority decision, authority, correspondence, pragmatism, consistency and coherence. Sense perception. There are realists who wish to simplify how to know the truth. To them, truth is precisely what the five senses—sight, smell, sound, taste and touch— depict them to be. For example, the water is cold to your touch; the ball is round as you see it; sugar is sweet to your taste; and the sound of music is pleasant to your ears. All of these you experience through your senses. Doubting your senses is to make a fool of yourself and to make yourself appear strange to other
BLOOMBERG
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onald J. Trump thinks he’s a great negotiator, a brilliant bluffer whose gut instincts are so stellar that ignorance of history and refusal to deal with substantive complexities are irrelevant.
That’s why he bragged he’d win the Nobel Peace Prize for his genius in getting North Korea to give up its nuclear weapons. Except, of course, it didn’t. It’s good his Singapore summit with Kim Jong Un was canceled. The larger picture in this and other major issues is how the American president is remarkably ill-prepared and uninformed. Incredibly, he might have been outmatched in the June 12 face-off with
the “little Rocket Man,” the untested North Korean tyrant. Analysts suggest Kim “has done his homework,” according to Jung Pak, a Brookings Institution scholar who was the North Korea expert at the Central Intelligence Agency and then for the director of National Intelligence. “He’s apparently well read on the issue and pretty comfortable with the technology,” she said. Pak wasn’t surprised when Trump,
There are 11 tests of truth widely used by scientists, philosophers and researchers. These are sense perception, feeling, instinct, intuition, customs and traditions, majority decision, authority, correspondence, pragmatism, consistency and coherence.
people who might even question your sanity. So can you really trust your senses? The answer is no because your senses at times may not give you the true meaning of things and that there are realities that are beyond your sense perception. For example, ideals and values cannot be tested by sensation. In short, your sense perceptions are not a good test of truth. Feeling. It’s natural that you would rather follow the dictates of your feeling than listen to your rationalizing mind. Instead of being guided by logical connections or by cause-and-effect relations, you are easily swayed by your hunches or premonitions, which are nothing but a strong feeling of something that is bound to happen or may not happen at all. While feeling is important for your existence, it cannot be used as a test of truth. For it is neither clear nor precise and is easily influenced by the condition of your health, your mood, your environment and many other factors. Customs and traditions. Customs are described as behavioral and are commonly practiced by members of a social group, while traditions are defined as customs which have been preserved for generations and have greater influence on one’s ways of thinking and doing things.
For instance, to meet the desire of a social group, such as families and religious congregations, certain beliefs had been developed to regulate and control the behavior of its members in order to have unity, stability and security, e.g., how to behave in solemn occasions, how to treat foreign guests, what to do when disasters occur and how to treat children. In fiesta celebrations, it is traditional to be hospitable to anyone who will come to your house. Customs and traditions then, although they served certain needs of individuals and groups, are not valid tests of what is true or false. Instinct. One kind of instinct is inborn; another is inherited and acquired. Both can be modified by intelligence and experience. Still, while instinct gives us some semblance of the truth, it cannot be trusted as a reliable source of truth. As with feeling, instinct is not precise. Indeed, it is usually in conflict with feelings. For instance, love and hate are both instincts; so is jealousy. To rely, therefore, on instinct is to undermine the progress of philosophical and scientific studies most of which are beyond what is instinctive. Intuition, some say, is a reliable test of truth. Actually, it is only one source of truth. And it is difficult to check the validity of intuitive experience. Intuition can only be verified through a cumbersome laboratory test. It may even happen that while you wait for the test result, misfortunes, such as typhoons, earthquakes or war may have already overtaken events. To be continued To reach the writer, e-mail cecilio.arillo@ gmail.com.
Opec and Russia best not poke the shale oil bear By David Fickling Bloomberg Opinion
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ere’s one underreported factor that may explain Russian and Saudi Arabian willingness to turn their backs on almost 18 months of Organization of the Petroleum Exporting Countries (Opec) oil supply cuts—the spread between Brent crude and West Texas Intermediate (WTI) has reached its widest level in three years: The simple reason for this is that the shale oil boom has left crude sloshing around the United States, resulting in a local oversupply. While Brent prices have risen some 14 percent over the past three months, WTI is up just 7.5 percent and Midland crude—the version of WTI priced in the booming Permian basin rather than the benchmark delivery point in Cushing, Oklahoma—is down 4.8 percent. The last time we saw these sorts
of spreads, there were sound legal reasons for it. The US had forbidden almost all exports of crude oil for four decades until the end of 2015, so for many years its soaring shale oil production was trapped by the ban and the capacity limits of US refineries that were able to convert it into exportable products. The growing spreads now suggest that supply is pushing up against a different sort of bottleneck: A shortage of pipeline capacity between Midland and Cushing, and then a further shortage of pipeline and port capacity to get US crude onto a hungry global market. The most straightforward way of looking at the Saudi-Russian plan to lift oil production is that they’re essentially maintaining the status quo. The 713,000 barrel-a-day decline in Opec’s total supply between 2016 and last month can be accounted for almost entirely by the decline in Venezuelan output, which has fallen
Trump’s Korea blunder is worse than it looks Albert R. Hunt
Tuesday, May 29, 2018 A7
after canceling the summit, said the next day that it might be back on. South Korean President Moon Jae-in and Kim held a surprise weekend meeting. A subsequent session now seems likely. But there’s little reason to believe a US president who governs by bluster and is interested only in whether he gets credit and looks good would be better prepared for any next round. That’s unsettling. Clearly, the North Koreans played games and were duplicitous; they always do and always are. It’s a brutal, corrupt regime. Trump and his sycophants claim it was his toughness that scared Kim and forced him to consider negotiations; they say the president showed resolve and guts in walking away. More likely, this has been Kim’s long-range plan for several years, as Robert Carlin, a former diplomat and intelligence official who has been to North Korea dozens of times, told The Washington Post’s David Ignatius. Kim effectively built up his nu-
clear arsenal, ignoring threats from Trump and others, and giving himself enough leverage to start to backtrack a bit. The regime supposedly dismantled one its nuclear testing sites last week. Without question, the economic sanctions, begun under President Barack Obama and toughened by Trump, pressured this economic basket case of a country. And more important than Trump’s “fire and fury” rhetoric was a new South Korean administration willing to deal with its seven-decade-old enemy; a war on the peninsula would topple Kim but at a cataclysmic price. Trump, being Trump, didn’t have the decency to give the South Koreans advance notice of his plans to cancel the summit. This is a pattern. He surprised our close ally when he impulsively announced he would meet with Kim, though no preparations had been made. Trump’s hawkish national security adviser John Bolton, eager to sabotage any deal, raised the analogy of Libya,
by about one-third—718,000 barrels a day—over the period. A further shoe may be about to drop, though: Iran, which added 308,000 barrels over the same period, is facing the prospect of US and global sanctions that could sharply trim its output. A reversal of the 487,000 barrel-a-day cut by Saudi Arabia and Russia would help plug that looming hole in production. There’s a further factor to consider, though, and it relates to what’s happening on the plains of Texas and Oklahoma. The latest period of supply restraint from Opec and Russia has, in essence, seen them give up market share to onshore North America. The 1.8 million barrels a day that they’ve taken off the market is almost entirely compensated for by the 1.53 million barrels a day of additional unconventional crude production from the US, not to mention 640,000 of additional daily barrels that have come out of Canada.
At the moment, infrastructure bottlenecks are keeping the US shale boom almost as quarantined from global markets as legal restrictions did in the pre-2016 era. But, as my colleague Liam Denning has written, those widening spreads between delivery locations are driving midstream operators to seek profit from new export channels, from pipelines to the nascent capacity to load larger tankers from Louisiana’s Loop terminal. Those constraints will take years to fix, but, in the meantime, one way to close those tempting spreads and nip such investments in the bud would be to dump some more oil in the non-US market commensurate with the amount coming out of the Permian. The potential of US exports is a sleeping bear that could eventually menace the current bull market in crude. Opec and Russia would be wise not to poke it.
which gave up its nuclear weapons and later, with Western support, was toppled. Vice President Mike Pence weighed in similarly. “Citing the Libyan example was very counterproductive,” notes Charles Armstrong, a Columbia University professor and Korean scholar. Trump’s clamor about de-nuclearization was a misnomer. Kim might make important concessions, but he’s never going to totally give up his most powerful chip; put yourself in his shoes. Early last year Trump acknowledged, after China’s Xi Jinping had explained it to him, that the Korean situation was more complicated than he had thought. Unfortunately, the president didn’t seem to learn much, alternately crediting and blaming China for North Korea’s behavior. There is mutual contempt between these two neighbors, but they need each other, a reality reinforced by Trump’s bumbling. History bores Trump—he seems not to know or care much—and he
doesn’t read briefing books. A few months ago in the New Yorker, top aides to former national security adviser H.R. McMaster attested to the president’s shallowness. National security briefings, one former staffer said, had to be boiled down to two or three bullet points, “with the syntactical complexity of ‘See Jane run’.” The great dealmaker has yet to make even a decent deal as president; he hasn’t negotiated anything on health care, immigration or infrastructure, and the trade negotiations with China may be a bust. In Korea, here’s what his gut instincts, with little knowledge, produced: North Korea is a greater nuclear threat than it was 17 months earlier. Kim Jong Un, depicted then as an irrational roly-poly comic-book figure with weird hair, is seen more as shrewd operative. China’s influence on the Korean Peninsula and the region has grown. And as American allies, especially South Korea, painfully learned, Washington is not reliable.
2nd Front Page BusinessMirror
A8 Tuesday, May 29, 2018
www.businessmirror.com.ph
CIDG nabs ‘brains’ in multimillion-peso scam T By Rene Acosta
@reneacostaBM
he police have arrested a key suspect in an alleged family-orchestrated multimillion-peso investment scam that has duped hundreds of victims.
Margarita Huang was arrested last Thursday by members of the Philippine National Police-Criminal Investigation and Detection Group (CIDG) at SMDC Grass Residences Tower 3, located along Nueva Vizcaya Street, Barangay Santo Cristo, Quezon City. Huang, also known as Margie, Marita and Irma Pascual, was nabbed based on the strength of three warrants of arrest for 12 counts of estafa. She was presented to PNP Chief Director General Oscar D. Albayalde on Monday. “I am proud to announce the arrest of Mrs. Margarita Huang, a.k.a. Irma Pascual, a key suspect in a celebrated case of syndicated estafa that allegedly defrauded hundreds of millions from unsuspecting investors in a ‘Ponzi scheme’ involving a purported lending business,” Albayalde said.
Palace defends Calida on security firm’s contracts
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“Mrs. Huang is accused in 12 separate criminal cases for estafa filed before RTC [Regional Trial Court] Branch 85 of Quezon City, RTC Branch 148 of Makati City and RTC Branch 40 of Quezon City with outstanding warrants of arrest issued by the three courts,” he added. Huang’s arrest stemmed from at least 423 “ bouncing checks” amounting to P130.5 million that she and her husband Gar y allegedly issued to 29 “ investors” in a purported lending business back in 2016. Huang, her husband, her son Conrad and her daughter Nicole have been the subjects of several complaints that were investigated by the Securities and Exchange Commission for alleged violation of the Securities Regulation Code. Another suspect, Marivic Ifurung, the
alacañang has defended Solicitor General Jose C. Calida, who is currently in hot water for his family’s alleged deals with several government agencies. Presidential Spokesman Harry L. Roque Jr. said it does not see conflict of interest if Calida’s family business, Vigilant Investigative and Security Agency Inc., bagged contracts with different government agencies, such as the National Parks Development Committee, National Anti-Poverty Commission and the National Economic and Development Authority.
couple’s alleged secretary in their business, is included in the complaints The Huang couple, their son and Ifurung posted bail last year, but Nicole remains at large and is reportedly in hiding in New Zealand. The CIDG said that 29 of the complainants sought its assistance, thus resulting in the arrest of Huang. “Margarita and her family visit their circle of friends and parishes to entice them to invest in a lending facility they were operating with a large employee cooperative under the Comfoods Inc., wherein her husband is an alleged copartner,” the CIDG said by way of explaining how the investment scam was perpetrated. It said the couple and their children promised their investors with earnings of from 4 percent up to 15 percent monthly interest, depending on the amount of money and length of the placement. "Investigation also revealed that all representations made by the suspects were a ruse to con their victims through Ponzi or pyramiding scheme. Likewise, Comfoods Inc., through its letter-reply, belied all the lending programs presented by the suspects,” the CIDG said.
In a statement last Saturday, the Office of the Solicitor General spokesman, Hector Calilung, said Calida resigned as chairman and president of Vigilant before assuming office. “My reading of the Constitution and the anti-graft law supports the conclusion made by the SolGen that there is no conflict of interest. He resigned all his corporate posts before he became SolGen, and I don’t think mere ownership of stocks certificates is prohibited by the Constitution,” Roque said. Roque added the prohibition covers cabinet
FLAG DAY Pelagio Ramirez, 87, unfurls a Philippine flag atop a giant statue of first Philippine President
Gen. Emilio Aguinaldo in Baguio City, in celebration of National Flag Day in the Philippines (May 28). It marks the day the country’s flag was first raised after the victory in the Battle of Alapan in 1898. Filipino revolutionaries, defeated the Spanish troops, enabling the recapture of the province of Cavite by General Aguinaldo’s troops. After that battle, on May 28, 1898, Aguinaldo unfurled, for the first time, what would become the Philippines’s national flag. MAU VICTA
members who directly or indirectly practice any other profession, participate in any business or be financially interested in any contract or with any franchise or special privilege granted by the government or any subdivision agency or instrumentality thereof, including government-owned and -controlled corporations or their subsidiaries. He said the issue broke out obviously because of the people hurt with Calida’s success when the Supreme Court granted his quo warranto petition nullifying Maria Lourdes A. Sereno’s appointment
as Chief Justice. “I think mere stock ownership is not prohibited for as long as you declare it in your SALN [Statement of Assets, Liabilities and Net Worth]. And right now, the situation for SolGen Calida is he acknowledged that he has stock ownership, but he is not exercising any management powers in the company. The shares of which are still owned by his family, and he has not entered into any contract with his own office, the Office of the Solicitor General,” Roque said. Bernadette D. Nicolas