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2019: The year of the data-driven digital ecosystem

By Jeff Clarke, Vice Chairman of Products
and Operations, Dell Technologies
IT’S THAT time of year — our planet has made its trip around the sun and as we close out 2018, we look ahead and think about the possibilities for 2019.And we’re closing in on the next decade of innovation that takes us into 2030, where we at Dell Technologies predict we’ll realize the next era of Human-Machine Partnerships — where we will be immersed in smart living, intelligent work, and a frictionless economy.
We made some bold predictions last year — some coming to fruition a bit faster than others… There’s still much to do in advancing artificial intelligence (AI) and machine learning technologies, and autonomous systems are continuing to take shape as organizations build the digital backbone to support them.
So what’s in store for 2019? Read on to see our top predictions for 2019 as we enter the data-driven digital ecosystem.
WE’LL BE MORE IMMERSED THAN EVER IN WORK AND LIFE
Virtual assistants continue to be pervasive in consumer technology — smart home technologies, “things” and connected cars — learning your preferences and proactively serving up content and information based on previous interactions. We’ll see this machine intelligence merge with augmented and virtual reality in the home to create truly immersive experiences — like a virtual sous chef that can help you whip up an easy meal for the family. And you’ll be more connected to your personal health with even more intelligent wellness tracking devices that can capture more information about the body, like heart rate variability (HRV), sleep patterns and more that you can easily share with health care providers for better care.
Immersive intelligence will also follow us to work. Our PCs and devices we use every day will continue to learn from our habits and proactively boot up with the right apps and services at the right time. Advances in natural language processing and voice technologies will create a more productive dialogue with machines, while automation and robotics will create faster, more fluid collaboration with technology to get more done. And, with augmented and virtual reality applications creating on- and off-site immersive experiences — people will have access to the data they need to do work whenever, wherever they are.
DATA GOLD MINE WILL SPARK NEXT ‘GOLD RUSH’ IN TECH INVESTMENTS
Organizations have been stockpiling big data for years. In fact, it’s predicted that by 2020, the data volume will reach 44 Trillion gigabytes, or 44 Zettabytes. That’s a lot of data. Soon they’ll finally put it to work as Digital transformation takes shape.
As they derive more value from that data — with insights driving new innovations and more efficient business processes — more investments will be born out of the technology sector. New start-ups will emerge to tackle the bigger challenges that make AI a reality: data management and federated analytics where insights can be driven from virtually everywhere, and data compliance solutions for a safer, smarter way to deliver amazing outcomes.
5G WILL HAVE US LIVIN’ ON THE EDGE
The first 5G devices are slated to hit the market sometime next year with the much-anticipated next-generation network that promises to completely change the data game in terms of speed and accessibility. Low-latency, high-bandwidth networks mean more connected things, cars and systems — and a boat load of AI, Machine Learning and Compute happening at the edge, because that’s where all the data will be generated.
It won’t be long before we begin to see micro-hubs lining our streets — mini datacenters if you will — that will also give rise to new “smart” opportunities for real-time insights happening on the corner of your street. Cities and towns will become more connected than ever, paving the way for smart cities and digital infrastructure that we predict will be thriving in 2030. And it’ll be a game changer for industries like health care or manufacturing, where data and information being generated out in the field can be quickly processed and analyzed in real time — versus having to travel back and forth to a cloud — and then readily shared with those who need it.
DATA FORECAST WILL CALL
FOR MORE CLOUDS
Last year we predicted the arrival of the Mega Cloud — a variety of clouds that make up a powerhouse operating model as IT strategies require both public and private clouds. So far that’s holding true. The public vs. private cloud debate will continue to wane as organizations realize that they need to effectively manage all the different types of data they’ll be processing.
A recent IDC survey pointed to more than 80% of respondents repatriating data back to on-premise private clouds — and we can expect that trend to continue, even with projections for public cloud growth.
Multi-cloud environments will drive automation, AI and ML processing into high gear because they give organizations the ability to manage, move, and process data where and when they need to. In fact, we’ll see more clouds pop up as data becomes increasingly distributed — at the edge in autonomous car environments or in smart factories, in cloud-native apps, in protected on-prem centers to meet a host of new compliance and privacy standards and of course, the public cloud for a variety of apps and services that we use every day.
MOVE OVER MILLENNIALS, GEN Z
WILL CLOCK INTO THE WORKPLACE
Millennials are going to have to make room for the next generation with Gen Z (born after 1995) badging into the workplace over the next year — creating an increasingly diverse workforce spanning five generations! This will create a rich range of experiences in life and technology. 98% of Gen Z will have used technology as part of their formal education, many already understand the basics of software coding and expect the only the best technology to be a part of their work experience.
Gen Z will spark a new evolution in technology innovation for the workplace and create more opportunities for technology literacy and on-site learning for new skills with older generations of workers. AR and VR will become increasingly commonplace and close the skills gap across an aging workforce — while giving Gen Z the speed and productivity they demand.
CREATING GUARDIANS OF THE DATA
With data rising as an organization’s most valuable asset, securing and protecting it continues to be a top priority. In a race to ensure that any and all access points remain secure, organizations will drive more dollars towards security investments, whether it’s stronger encryption at end-point access or intelligent cybersecurity that spans the distributed data center at the edge and the cloud.
We’ll see AI and Machine Learning increasingly playing a role to proactively protect the data that’s most attractive to attack or theft, and smart enough to thwart access before humans realize the data is under siege.
NO MORE WEAK LINKS OR WASTE: SUPPLY CHAINS WILL GET STRONGER, SMARTER, AND GREENER
Believing in the many advantages to running a sustainable business, organizations will follow our lead and begin to accelerate ways to design waste out of their business models through new innovation in recycling and closed loop practices. To help, we at Dell are sharing our blueprint for turning ocean bound plastics into recycled packaging and turning soot from diesel generator exhaust fumes into ink for printing on boxes.
We’ll see advances in supply chain traceability, by scrutinizing and harnessing emerging technologies to identify precise opportunities to course correct. Blockchain will likely play a role as well, to ensure trust and safety in sourcing, while also securing information and data about goods and services along the way.
There’s never been a better time for technology — with innovation in 5G, AI and Machine Learning, cloud and blockchain throttling full steam ahead. I’m willing to bet that we’ll make great use of those 44 zettabytes of data in 2020. We’ll unlock the power of data in ways never before imagined before, transforming everyday business and everyday life. So buckle up — we’re riding full speed into the Data Era — and 2019 is going to be one heck of a year.

Magic on Ice at the Smart Araneta Coliseum adds more shows

THE RUN OF THE one-of-a-kind Christmas show that mixes magic with ice skating has been extended. Magic On Ice at the Smart Araneta Coliseum was originally slated to have performances until Jan. 1 only, but it has been extended until Jan. 2 and a couple of more performances have been added to the run. The new Magic On Ice schedule, including the added shows, is as follows: Dec. 27 (2 and 6 p.m.), Dec. 28 (2 and 6 p.m.), Dec. 29 to Jan. 1, 2019 (2 and 6 p.m.), and Jan. 2 (2 and 6 p.m.). This will give more audiences a chance to catch the acts that have already enamored viewers from the United States, Europe and other parts of Asia. For the show, The Big Dome will be turned into a giant skating rink complete with lights and effects produced by teams that have worked with international superstars Madonna, Sting and Prince. Tickets to Magic On Ice are now available at Ticketnet outlets nationwide and through www.ticketnet.com.ph and 911-5555. One may also opt to stay at Novotel Manila Araneta Center, just beside the Big Dome, which is offering the “Stay N Delight in Christmas Magic” promo bundle, which offers an overnight stay for two with buffet breakfast plus two Lower Box tickets to Magic On Ice for P8,000 nett. This promo runs until Jan. 1. For more updates, visit www.smartaranetacoliseum.com.

Dusit-managed Beach Club opens in Davao

DUSIT INTERNATIONAL on Wednesday said it has officially opened The Beach Club at Lubi Plantation Island, Davao Gulf.
“Ideal for day trips, special events, and memorable meetings, The Beach Club at Lubi Plantation Island offers a unique escape amidst nature, and we look forward to delighting visitors of all ages with our unique brand of Thai-inspired, gracious hospitality in this stunning island setting,” Lim Boon Kwee, chief operating officer of Dusit International, said in a statement.
Managed by Dusit International and owned by Torre Lorenzo Development Corp. (TLDC), The Beach Club is located within the former coconut plantation now being developed as a leisure township.
The Beach Club features a swimming pool, a children’s play area, an event hall, the Tarictic Grill & Snack Bar, and a 50-meter private beach. Guests can also do snorkeling and diving activities in the area.
“The opening of The Beach Club at Lubi Plantation Island signals an exciting time for Dusit in Davao, and we are delighted we can give visitors the opportunity to experience this beautiful sanctuary ahead of the opening of the two hotels — dusitD2 Davao and Dusit Thani Residence Davao,” he said.
Aside from The Beach Club, Dusit will also manage two hotels owned by TLDC — dusitD2 Davao and Dusit Thani Residences in Lanang, Davao City. It only takes 30 minutes by boat to go to Lanang from The Beach Club.
Scheduled to open in February 2019, the dusitD2 Davao will have 120 rooms with a “contemporary, vibrant style.” It will also have a lap pool, wading pool, children’s pool, international restaurants, a Namm spa, gym facility, four meeting rooms, and two ballrooms that can accommodate 1,000 guests.
Adjacent to the dusitD2 property, the 178-room Dusit Thani Residence Davao is scheduled to open in April 2019.
Last month, Dusit and TLDC signed a professional management agreement for Dusit International’s management of the first international hotel chain in Lipa City called Dusit Princess Lipa. It is set to open by 2021.
Dusit International is a Thai-hotel brand founded in 1948. Currently, it is operating under four brands namely Dusit Thani, dusitD2, Dusit Princess, and Dusit Devarana.
On the other hand, TLDC is the pioneer in the concept of Premium University Residences. Its properties are located in Sampaloc, Manila (Torre Central); Malate, Manila (3Torre Lorenzo); Las Piñas (Torre Sur); and Taft, Manila (2Torre Lorenzo). — Vincent Mariel P. Galang

How PSEi member stocks performed — December 26, 2018

Here’s a quick glance at how PSEi stocks fared on Wednesday, December 26, 2018.

 
Philippine Stock Exchange’s most active stocks by value turnover — December 26, 2018

Stocks end lower on thin trading, Wall St.’s drop

By Arra B. Francia, Reporter
SHARES TREKKED lower on Wednesday due to thin trading, while also weighed down by the weakness of markets abroad.
The bellwether Philippine Stock Exchange index fell 0.39% or 29.70 points to close at 7,450.01 on the first trading session after Christmas break. The broader all- shares index likewise dropped 0.25% or 11.66 points to 4,489.92.
“As expected, it was a dull and quiet day for the market… The index initially experienced weakness in the morning due to negativity from the plunge of US markets over the long weekend, but steadily rose throughout the day,” Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said in an e-mail.
Regina Capital Development Corp. Managing Director Luis A. Limlingan noted that the PSEi managed to temper losses compared to markets in the United States yesterday.
“Philippine shares traded in the red, albeit to a lesser extent than the rest of Asia and the US as the federal government partially shut down after Congress failed to pass spending legislation,” Mr. Limlingan said in a mobile phone message.
Wall Street’s major indices suffered a bloodbath on Christmas eve, with the Dow Jones Industrial Average closing 2.91% or 653.17 points lower to 21,792.20. The S&P 500 index retreated 2.71% or 65.52 points to 2,351.10, while the Nasdaq Composite index plunged 2.21% or 140.08 points to 6,192.92.
Investors abroad are concerned about the health of the US economy, in addition to US President Donald J. Trump’s criticism that the Federal Reserve is hiking interest rates too rapidly.
Most Southeast Asian stock markets also fell tracking their global peers on Wednesday, with Singapore taking the maximum hit, as continued concerns over political uncertainty in the US prompted investors to steer clear of riskier assets.
Back home, four sectoral indices ended in negative territory, led by the industrials sector which shed 0.89% or 98.8 points to 10,911.74. Services slipped 0.83% or 12.11 points to 1,438.44; holding firms slipped 0.7% or 52.06 points to 7,316.86, while financials went down 0.02% or 0.37 point to 1,755.91.
Meanwhile, the mining and oil counter soared 2.93% or 233.06 points to 8,176.61. Property also gained 0.25% or 9.05 points to 3,629.87.
Turnover slimmed to P3.39 billion after some 771.52 million issues switched hands, less than half of the P7.1-billion turnover seen last Friday.
Net foreign selling rose to P766.43 million from the previous session’s P480.63-million outflow.
Papa Securities’ Mr. Perez said placed the index’s initial support at around 7,350, noting that the PSEi may continue to be hindered by negative sentiment abroad as well as net foreign selling.
“Furthermore, we might see more of the quiet trading we’ve seen [on Wednesday] in the next two days with the upcoming holidays,” Mr. Perez said. — with Reuters

Farm output target in doubt after flat 3 quarters

THE Department of Agriculture’s (DA) target of 2.5% growth in farm output this year is unlikely to be achieved, an economist said.
“The basis for 2% growth in 2018 given stagnation in three quarters is not solid,” Rolando T. Dy, University of Asia and the Pacific (UA&P) Center for Food and Agribusiness executive director and professor, said in a mobile message.
“It will take a sharp 6% surge in the fourth quarter to land an annual growth of 2%,” Mr. Dy added.
According to Philippine Statistics Authority (PSA) data, the agriculture sector grew 0.15% year-on-year in the first nine months of 2018. The PSA reported that the agriculture sector contracted by 0.83% in the third quarter, including a decline in the crops and fisheries subsectors of 3.64% and 2.64% respectively.
The PSA reported that production of palay (unmilled rice) and corn fell 5.70% and 14.83% respectively during the third quarter.
The fisheries subsector, on the other hand, posted a drop of 2.21% in production in the nine months to September, featuring declines in the production of milkfish, tiger prawn, round scad and yellowfin tuna, and gains in production of tilapia, skipjack and seaweed.
The livestock sub-sector grew 2% in the nine months to September, with poultry production up 5.31%.
PSA said that prices for all subsectors rose this year, by 5.78% for crops, 6.52% for livestock, 13.03% for poultry, and 15.26% for fisheries. Farmgate price jumped by an average of 6.85% in the nine months to September.
Agriculture Secretary Emmanuel F. Piñol announced last week that economic managers instructed his department to maintain 2% annual growth to keep pace with population growth of 1.7%, but added that the department aims to hit 2.5% growth this year and 3.5% in 2019.
“I think 2% is doable. We are confident that we can hit it given the fact that there are already specific interventions in fisheries for example. We are now addressing the post-harvest issues, we are expecting fisheries to post positive growth by next year because of this. We are investing P300 million for post-harvest facilities,” Mr. Piñol said in the DA’s year-end conference on Dec. 18.
“We are expecting livestock and poultry to grow further especially now that we are focusing on producing more feed grains, for these sectors… We thought of coming up with a program wherein feed grain materials (can) be processed at the farm level so that our hog raisers and poultry raisers will realize more profit because of the lower expense.”
“Also for crops, especially rice, we are expecting a boost from the RCEF (rice competitiveness and enhancement fund). With P10 billion minimum every year, we are expecting that we will be able to serve the good quality seed needs of our farmers and you have to understand that in the rice road map that we have prepared as early as 2016, the availability of good seed material actually was one of the five key factors which our outstanding farmers have identified and they said that this was one of the reasons they are producing eight to ten metric tons (MT) every harvest, so the target set by the economic managers at 2% will be doable, in fact our projection is between 2.5% to 3.5% for 2019,” Mr. Piñol said.
Mr. Dy, on the other hand, also noted that “We cannot grow agriculture by rice alone.” — Reicelene Joy N. Ignacio

Central Luzon investment hub bill hurdles bicam

A BILL creating the Regional Investment and Infrastructure Coordinating Hub (RICH) for Central Luzon has been approved by the Bicameral Conference Committee.
The measure intends to establish RICH, in place of the Subic-Clark Alliance for Development Council, as the body to lead infrastructure development in Central Luzon.
RICH’s mission also includes to “effectively address bottlenecks and decongest Metro Manila, lay the foundation for long-term growth of Central Luzon and increase the productivity of the people.”
The Bicameral Conference Committee, presided over by Senator Richard J. Gordon and North Cotabato 1st district Rep. Jesus N. Sacdalan, adopted and approved on Dec. 10 Senate Bill No. 1997, subject to amendments.
In its last version, the bill proposed that the Central Luzon Investment Corridor Master Plan be developed by the RICH Board of Directors, in coordination with local government units and stakeholders.
CLIC will, among others, incorporate existing plans created for the development of the Subic-Clark and Tarlac area.
The Master Plan will also “include the provision of adequate and affordable housing facilities within the Special Economic or Freeport Zone.”
The measure also proposes to establish a One Stop Shop that will facilitate the registration of enterprises in Central Luzon in coordination with RICH, the Philippine Economic Zone Authority, Tourism Infrastructure and Enterprise Zone Authority, Clark Development Corp. and Subic Bay Metropolitan Authority. — Charmaine A. Tadalan

Budget talks delaying passage of service incentive leave bill

A BILL increasing worker’s service incentive leave (SIL) benefit to 10 days has been set aside for the moment while the Senate concludes budget deliberations, legislators from both chambers said.
“We are already in the period of interpellation for the Service Incentive Leave. Once we finish the budget deliberations, we will push for the measure to be taken up on the floor,” Senator Emmanuel Joel J. Villanueva told BusinessWorld in a phone message on Wednesday.
Senate Bill No. 1614, which proposes to increase SIL to 10 days with pay from the current five days, is awaiting second reading. Its counterpart measure, House Bill No. 6770 hurdled third reading on Aug. 29.
Cagayan 3rd district Rep. Randolph S. Ting, who chairs the House Labor and Employment Committee, said the passage of the measure will wait on the budget proceedings in the Senate.
“The problem is that the Senate is not yet done with the Budget,” Mr. Ting told BusinessWorld in a phone message. “That constraint will affect the scheduling of all concerns in the Senate.”
The Senate is expected to continue deliberations on the General Appropriations Bill for 2019 when session resumes on Jan. 14.
Congress will then go on break on Feb. 8 and resume on May 20, following the election period. The 17th Congress officially adjourns on June 7.
The Employers Confederation of the Philippines (ECOP) said the potential for increased paid leave will affect productivity and the cost of doing businesses.
“While ECOP does not begrudge increasing the grant of service incentive leave, it is concerned that any further reduction in the number of working days, particularly through additional paid leaves, impacts not only on productivity, but also on the cost of doing business and viability of micro and small enterprises,” ECOP said in a position paper.
ECOP proposed that the Department of Labor and Employment issue guidelines exempting small and micro enterprises based on each establishment’s financial condition.
Both versions of the bill exempt establishments that employ less than 10 people. The expanded SILL in both versions also does not apply to employees already entitled to paid vacation leave of at least 10 days. — Charmaine A. Tadalan

DTI bans sale of uncertified steel bars

THE Department of Trade and Industry (DTI) said it imposed new rules covering the product safety (PS) certification of certain steel bar products.
Administrative Order No. 18-08 published last week said the DTI will only allow the domestic distribution of deformed steel bars, rerolled steel bars and equal leg angle steel bars if these products come from plants certified by the Bureau of Philippines Standards (BPS).
“For safety, traceability and accountability purposes, only steel products sourced from steel manufacturing plants holding a valid PS Quality and/or Certification Mark License shall be permitted to be distributed, sold and used in the Philippines,” the DTI said in its order.
The PS licensing scheme is available to both domestic and foreign companies.
Compliance will be determined through an annual audit at the factory. Domestic companies will also undergo regular audits at their warehouses while foreign companies will likewise go through the process on a per-shipment basis.
The PS license is effective for three years and is subject to regular compliance monitoring. It may be withdrawn, suspended or cancelled any time if a company is found unable to pass the BPS’ evaluations.
Importers need to secure a statement of confirmation for each product and bill of lading to ensure that the shipment is sourced from a PS-licensed manufacturer.
Deformed steel bars and rerolled steel bars are used as concrete reinforcement for commercial, residential and industrial buildings.
Equal leg angle steel bars are also used for commercial, residential and industrial buildings but with wider application in trusses, sections and steel frame.
The Philippine Iron and Steel Institute (PISI) has asked the government to act on the proliferation of substandard and uncertified steel bars.
As of Aug. 28, the BPS oversees the certification of 88 various products. — Janina C. Lim

MWSS, NIA to jointly carry out key projects

THE Metropolitan Waterworks and Sewerage System (MWSS) and National Irrigation Administration (NIA) will share resources to better participate in the government’s infrastructure program, MWSS said.
In a statement, MWSS Administrator Reynaldo V. Velasco said he and NIA Administrator Ricardo R. Visaya had agreed to help solve the water and food security problems of their stakeholders through joint projects that include flood mitigation.
Mr. Velasco said the water supply in Metro Manila and nearby provinces remains adequate, but more sources need to be developed for water security in the agency’s coverage areas.
Of the water supplied to the MWSS service areas, 96% is sourced from the Angat-Umiray water system, 3% from Laguna de Bay and 1% from ground water, he said. The agency has not developed new sources in decades except for the Angat-Umiray system, he added.
MWSS is implementing several water infrastructure projects, including the Bulacan bulk water supply project and what is collectively named the “Angat Water Security Projects.”
Mr. Velasco said of the agency’s 46 cubic meters per second (cms) of water rights, 15 cms is from the NIA’s 36 cms water rights as called for under Resolution No. 03-0188 of the National Water Resources Board (NWRB).
The distribution leaves NIA with 21 cms equivalent to 1,814 million liters per day (MLD). NIA’s Bustos dam currently has a capacity of 600 MLD, leaving 1,214 MLD that can be tapped for potable water.
He said MWSS had recently entered into a memorandum of agreement with ITP-JV Co. to conduct a feasibility study on the use of the untapped water.
ITP-JV Co. submitted an unsolicited proposal to extract an average flow of 800 MLD, of which 400 MLD will augment the water supply of Bulacan, and 400 MLD will be used by MWSS.
The water extraction will be done in two phases, with the first one calling for the extraction of 250 MLD by 2020-2021. The second phase will extract 550 MLD, and will be completed by 2022-2024.
Mr. Velasco said the move is the first part of the agency’s “ABC Projects.” It will form part of the Angat-Ipo-Norzagaray water optimization plan.
The other components of the ABC Projects are the Bayabas dam project and the Candaba multi-purpose impounding dam. The Bayabas project is in Doña Remedios Trinidad, Bulacan.
The completion of these projects will provide the desired water security level for mega Manila for the next five to 10 years, he said.
For NIA, the projects mean sufficient water supply for irrigation as it fulfills its objective of agricultural productivity, economic growth and food sufficiency, MWSS said. — Victor V. Saulon

Senate approves bill extending TIEZA power to grant incentives

THE SENATE approved on third and final reading a bill extending the authority of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) to grant incentives to tourism enterprises until Dec. 31, 2029.
Senate Bill No. 1616 was approved with 17 affirmative votes, zero negative votes, and no abstentions on Dec. 10. The bill seeks to amend Republic Act No. 9593 or the Tourism Act of 2009 to allow the implementation of the incentives scheme to tourism enterprises for another 10 years.
Under the current law, TIEZA has only until August 2019 to grant its incentives.
According to the bill’s committee report, the passage of the proposed measure was sought by the Senate Blue Ribbon Committee after it was revealed during its hearings in 2016 that TIEZA not granted incentives since 2009 due to the lack of Revenue Regulations issued by the Bureau of Internal Revenue (BIR).
After two Senate hearings on the issue, the BIR issued Revenue Regulation No. 7-2016. The revenue regulation noted that the incentive schemes are only effective until 2019 due to the 10-year limit provided in the law.
“While we should be glad that finally the BIR has acted and performed its duty by releasing a Revenue Regulation, we pause to realize the 10-year period granted for incentives in reality means a period much less than the ten years. The law was passed in 2009. So the incentives will end on 2019. This tells us that incentives can run for less than two years only. This is not what the Congress intended this to be,” Committee Report No. 169 stated.
The Senate panel then moved for the passage of the bill that removes the provision in the law which limits the grant of incentives within the 10-year period and extended the grant to Dec. 31, 2029.
The incentives TIEZA can grant to tourism enterprises include income tax holidays for a period of six years, a 5% preferential tax on gross income, exemptions on all taxes and customs duties on the importation of capital equipment, as well as the exemption of transportation equipment and spare parts from tariffs and duties.
TIEZA is also authorized to give preference to “large investments” that provide jobs and that involve local small and medium enterprises.
The bill’s counterpart measures in the House of Representatives, House Bill No. 7333 and House Bill No. 7535, remain pending at committee level. — Camille A. Aguinaldo

Tax court rejects P219-M Petron refund claim

THE Court of Tax Appeals (CTA) rejected for lack of merit Petron Corp.’s claim for a refund of P219.12 million worth of excise tax allegedly collected erroneously by the Bureau of Internal Revenue, ruling that a gasoline component imported by the company is subject to tax.
In a decision promulgated on Dec. 18, the CTA special second division ruled that Petron’s import of alkylate, a blending component in motor or aviation gasoline, is subject to excise tax under the Tax Code as it is similar to naphtha, a raw material used in making petrochemical products, and regular gasoline.
Section 148(e) of the National Internal Revenue Code of 1997 states that naphtha, regular gasoline, and other similar products of distillation as well as the by-products of processing of naphtha are subject to excise tax as soon as they are produced.
The Court concluded from the testimony of Petron’s witnesses that although alkalyte is formed through a different process, the raw materials in producing it are formed through distillation.
“Based on the afore-quoted law, excise tax shall attach to refined and manufactured mineral oils or motor fuels such as naphtha, regular gasoline, and other similar products of distillation as soon as they come to existence,” it ruled.
“As such, it is obvious that alkylate first undergoes the process of distillation, because it cannot come into existence without its raw materials, olefins and isobutane. Since it can be considered as a product of distillation similar to naphtha, alkylate is subject to excise tax, pursuant to Section 148(e) of the NIRC of 1997, as amended,” it added.
Petron was claiming a refund of the excise tax it paid from September 2012 to December 2012 worth P148.55 million and from February to July 2013 worth P70.61 million.
It claimed that alkylate is not among the petroleum products listed in the Tax Code and cannot be considered as motor fuel. It also said that it is not a product of distillation and is solely used as a blending component in making unleaded premium gasoline.
The CTA also cited its decision in a previous case also involving Petron in which it ruled that alkylate is subject to excise tax as it is an “intermediate or raw gasoline component that possesses properties, especially octane and aromatics that meet gasoline requirements.” — Vann Marlo M. Villegas

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