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US-based chip-tech group moving to Switzerland over trade curb fears

SAN FRANCISCO/WASHINGTON — A US-based foundation overseeing promising semiconductor technology developed with Pentagon support will soon move to Switzerland after several of the group’s foreign members raised concerns about potential US trade curbs.

The nonprofit RISC-V Foundation (pronounced risk-five) wants to ensure that universities, governments and companies outside the United States can help develop its open-source technology, its Chief Executive Calista Redmond said in an interview with Reuters.

She said the foundation’s global collaboration has faced no restrictions to date but members are “concerned about possible geopolitical disruption.”

“From around the world, we’ve heard that ‘If the incorporation was not in the US, we would be a lot more comfortable,’” she said. Redmond said the foundation’s board of directors approved the move unanimously but declined to disclose which members prompted it.

Created in 2015, the RISC-V Foundation sets standards for the core chip architecture and controls who can use the RISC-V trademark on products, as other organizations do for Wi-Fi and Bluetooth chips. It does not own or control the technology.

More than 325 companies or other entities pay to be members, including US and European chip suppliers such as Qualcomm Inc. and NXP Semiconductors, as well as China’s Alibaba Group Holding Ltd. and Huawei Technologies Co. Ltd.

The foundation’s move from Delaware to Switzerland may foreshadow further technology flight because of US restrictions on dealing with some Chinese technology companies, said William Reinsch, who was undersecretary of commerce for export administration in the Clinton administration.

“There is a message for the government. The message is, if you clamp down on things too tightly this is what is going to happen. In a global supply chain world, companies have choices, and one choice is to go overseas,” he said.

In a statement to Reuters, the US Department of Commerce said its controls were designed to safeguard US national security and to “ensure bad actors cannot acquire technology that harms US citizens or interests, while promoting innovation to fuel continued American technological leadership.” The department said it meets regularly with private industry to gauge market conditions and the effects of its regulations.

Some Republican US lawmakers said they are concerned the United States will lose influence over RISC-V chip architecture, which can be used to make microprocessors for almost every type of electronic device, making it a crucial building block of a modern economy. The technology came from labs at the University of California, Berkeley, and later benefited from funding by the Pentagon’s Defense Advanced Research Projects Agency (DARPA).

The lawmakers warn that the foundation’s Chinese members could influence the technology’s development to help China’s semiconductor industry.

“The Chinese Communist Party is trying to circumvent our export control system to support national security threats like Huawei — we cannot let it succeed,” Representative Mike Gallagher, a Republican from Wisconsin, told Reuters.

Arkansas Republican Senator Tom Cotton said moving the foundation to ensure it could retain Chinese members was “short-sighted at best.” He added that “if American public funds were used to develop the technology, it’s also completely outrageous.”

Redmond said in follow-up emails after speaking to Reuters that given the technology is open source and available to anyone, she does not see how the move could be against the US national interest.

A DARPA spokesman told Reuters the agency intended for RISC-V work it funded to be publicly available to companies and academics around the world.

Morgan Reed, president of The App Association, which receives funding from major US technology firms such as Apple Inc. and Microsoft Corp. in Washington, likened the RISC-V Foundation’s work to efforts between US and Chinese companies to jointly develop Wi-Fi chip standards.

“The notion that China can be barred from participating in standards alongside the US and the EU is simply not viable,” Reed said. “China is too important as a manufacturer and an end-market to ignore.”

INSURANCE POLICY
The RISC-V Foundation announced at a meeting last December it would seek a “neutral” country before making a formal decision to go to Switzerland earlier this year, a decision that got little public attention. Final approvals in Switzerland for the move are expected as soon as the end of November, Redmond said.

Chinese companies have had access to the RISC-V architecture, which is publicly available, since its creation, Redmond said.

Alibaba claimed in July it had developed the fastest RISC-V processor to date. The company declined to comment for this story.

The RISC-V Foundation’s move shows how US-China trade tensions could make the United States a harder place to host technology standards groups, according to two attorneys who represent such groups.

The lawyers said it is unclear whether standards groups are allowed to work with Huawei. These groups are concerned US authorities may decide that some closed-door technical discussions involve the transfer of sensitive technology to the Chinese or others on banned lists, said one of the attorneys, Brad Biddle, who works for several standards groups.

In June, more than two dozen standards groups — including those overseeing SD memory cards and Ethernet and HDMI cables — wrote a letter to US Commerce Secretary Wilbur Ross asking for clarification of the rules on working with Huawei.

The groups warned Ross that the Huawei restrictions posed a “serious risk” that standards work could move out of the United States, which could end a long-held trend where US-based groups set de facto standards for the rest of the world, they wrote.

The Commerce Department published an advisory opinion seeking to clarify the issue in August, but standards lawyers said the rules remain confusing.

The RISC-V Foundation’s Redmond does not yet see a “credible threat” to international collaboration. “But we’re taking out an insurance policy against that type of action by moving our incorporation,” she told Reuters.

HUAWEI SUPPORTS MOVE
The board’s seven current members are all based in North America. After the move, the foundation’s board will be expanded and European and Asian members will be added, said Redmond. Reuters could not confirm whether any Chinese companies planned to join the board.

Andrew Updegrove, an attorney who does work for standards groups, said that US restrictions on transferring US-origin technology to Chinese companies will still apply regardless of where the RISC-V Foundation is headquartered.

At Netherlands-based NXP Semiconductors, which is a member of the foundation, customers have asked the company to detail where the technology in its chips comes from, said Lars Reger, its chief technology officer. The customers do not want to be cut off in future trade disputes, he said.

US officials and some lawmakers have alleged Huawei’s telecom equipment may enable surveillance by China. The resulting backlash has prevented it from making inroads into the US market. Huawei has denied the claims.

In response to Reuters questions, a Huawei spokesman said: “We support RISC-V Foundation identifying Switzerland as a neutral venue for open source development. Making open source as open as possible is important for the industry.”

He said that RISC-V “might fit well into Huawei’s vision of this heterogeneous, open world.” — Reuters

BoJ’s Sakurai sets high bar for more easing

KOBE, Japan — Japan’s central bank can hold off expanding stimulus for now as robust domestic demand offsets the hit to exports from overseas risks, its board member Makoto Sakurai said, suggesting no additional easing was likely in the near term.

Mr. Sakurai, known for his more conservative views on aggressive monetary easing, instead called for the Bank of Japan (BoJ) to pay more attention to the negative impact of prolonged easing.

The former academic said the imminency of additional easing has subsided compared with around September, when fears of a bigger-than-expected slowdown in China’s economy clouded the outlook.

“Looking at the current state of Japan’s economy, things aren’t deteriorating further,” Mr. Sakurai told a briefing after meeting business leaders in Kobe, western Japan, on Wednesday.

“I don’t see a need now to move proactively now. Now is the time to closely watch economic developments,” he said, suggesting that the central bank was likely to keep policy steady at its rate review next month.

The BoJ kept policy steady last month but gave the strongest signal to date that it may cut interest rates in the near future, underscoring its concern that overseas risks could derail a fragile economic recovery.

Many analysts, however, believe the threshold for more rate cuts is high due to the rising side-effects of prolonged easing, such as the strain years of ultra-low interest rates are inflicting on financial institutions.

Mr. Sakurai, among the BoJ’s nine board members, said the central bank may need to deploy all available tools if Japan is hit by a severe shock that disrupts its banking system.

However, he saw no immediate need for the central bank to match government’s plans for fiscal stimulus with even looser monetary policy, as current BoJ settings were already extremely accommodative.

That leaves maintaining the BoJ’s current stimulus program as the best approach for now along with closely monitoring how commercial banks cope with prolonged ultra-low rates.

“In guiding monetary policy, there’s an increasing need to be mindful of the side-effect of continuing our low-rate policy such as that on Japan’s banking system,” Mr. Sakurai said.

Under a policy dubbed yield curve control (YCC), the BoJ pledges to guide short-term rates at -0.1% and the 10-year bond yield around 0%.

While the policy has helped keep corporate borrowing costs low, it has flattened the yield curve and crushed the margin commercial banks earn from lending.

The International Monetary Fund urged the BoJ to consider steps to ease the strains on financial institutions, such as shortening the maturity of bond yields it targets.

“It’s true the yield curve has flattened quite a bit. We need to take this into account in guiding policy,” Mr. Sakurai said, when asked about the IMF’s proposal.

Mr. Sakurai is seen by market participants and analysts as belonging to a broad camp on the central bank board that is more concerned about the side-effects of prolonged easing, while other board members see more room for stimulus.

Japan’s economic growth slumped to its weakest in a year in the third quarter as soft global demand knocked exports. Analysts fret that a sales tax hike from October could also weigh on the economy.

“The next half-year is when we need to carefully scrutinize economic developments,” he said, noting the risks that an October sales tax hike could cool consumption and that global growth was unlikely to pick up until around mid-2020. — Reuters

How PSEi member stocks performed — November 27, 2019

Here’s a quick glance at how PSEi stocks fared on Wednesday, November 27, 2019.

 

How does the Philippines compare with its ASEAN neighbors in terms of investments made in the region?

How does the Philippines compare with its ASEAN neighbors in terms of investments made in the region?

NGCP says no instance of remote access to grid

THE National Grid Corp. of the Philippines (NGCP) said Wednesday that there was no cause for alarm over Chinese involvement in the power distribution system, noting that the grid’s controls have never been accessed remotely since the company’s founding.

“There is nothing to be alarmed about the stake by the State Grid Corp. of China (SGCC) in NGCP as its investment is limited only to being a technical adviser,” Anthony L. Almeda, NGCP president and chief executive officer, said in a statement.

Legislators have raised concerns that China has the ability to shut down the Philippines’ power grid, and have called for an investigation into the ownership of NGCP.

In its statement, NGCP said State Grid has a 40% stake in NGCP, but the controlling 60% belongs to Filipino companies Monte Oro Grid Resources Corp. and Calaca High Power Corp. with 30% shares each.

As such, State Grid has only three nominees to the NGCP board, in proportion to its ownership level, it added.

“State Grid serves only as the technical adviser of the consortium, but the management and the control of NGCP, including its Systems Operation, are exclusively exercised by Filipinos,” Mr. Almeda said.

He said the Supervisory Control and Data Acquisition (SCADA), the system that controls the grid, is operated only by authorized Filipino technical experts of NGCP.

“By default, SCADA is disconnected from the Virtual Private Network (VPN); thus, remote users cannot connect to SCADA,” he said, adding that “VPN access may only be granted to the Filipino CEO in an emergency situation and only after undergoing a secure and confidential approval process.”

NGCP said since its operations started in 2009, the approval process for VPN access has not been invoked and no remote access has been granted.

Mr. Almeda said NGCP’s systems operation data center has biometric access controls that allow only its authorized personnel to enter. He also said the SCADA workstations and servers are secured by firewalls and layers of authentication systems to block unauthorized access.

He invited legislators to visit NGCP’s facilities to see how the power grid is managed and operated.

“We are happy to welcome our senators and congressmen as well as an independent third party to visit our facilities in order to dispel any security concerns that had been raised these past few days,” Mr. Almeda said.

He said Energy Secretary Alfonso G. Cusi inspected the NGCP facilities in August 2017. He added legislators during the previous administration had visited the same facilities.

Mr. Almeda said NGCP has not entered into other businesses, other than those permitted under its concession agreement.

Telecommunication companies use NGCP facilities through co-location agreements, the company said. These deals allow a third party to “piggy-back” on its right-of-way or existing facilities but this does not involve tapping into or using the transmission service provider’s fiber optic cables, it said.

“NGCP declares all earnings from related businesses and uses the same to lower transmission rates in full compliance with the provisions of EPIRA and Concession Agreement,” Mr. Almeda said. — Victor V. Saulon

BoC cites weak imports, fuel marking delay for missed targets

THE Bureau of Customs (BoC) told a Congressional panel that major ports failed to meet their revenue targets because of a slowdown in imports, adding that some targets have been set too high and do not account for delays in the fuel marking program.

Customs officials were appearing before the House Ways and Means Committee Wednesday.

The committee heard from district collectors that almost all ports posted a “negative deviation from the target” in each month of 2019 up to October.

The BoC added that fuel marking, an anti-smuggling measure, was supposed to result in P10 billion more collections this year, though the program’s full implementation has been moved back to March.

The BoC also noted weaker imports of oil, sugar, and automobiles.

ACT-CIS Party list Representative, Eric Go Yap also queried the BIR about cash being brought in through airports.

Customs Commissioner Rey Leonardo B. Guerrero said the largest single instance of cash being brought in through the airports involved up to $2 million.

“Based on records… (there were) a total of 20 persons who brought in almost P6 billion (in September and October).” Mr. Guerrero added.

Individuals bringing in large amounts of cash are only queried for the intended use of the funds, according to Mr. Guerrero.

Mr. Yap noted the possibility the funds could be used to finance terrorism, and drew a contrast to Overseas Filipino Workers who are taxed for bringing in appliances like televisions.

“Pero yung P6 billion… for two months walang tax, walang investigation. (In those two months when the P6 billion was brought in, no one was taxed or investigated).” Mr. Yap said.

In the 10 months to October, the BoC had collected P528.036 billion against the target for the period of P544.540 billion.

Asked if the bureau will hit its target this year, Assistant Commissioner in charge of Post Clearance Audit Vincent Philip C. Maronilla told reporters in a chance interview, “No choice but to be optimistic.” — Genshen L. Espedido

PHL, S. Korea sign fisheries, aquaculture agreement

THE Department of Agriculture (DA) has signed a memorandum of understanding (MoU) with South Korea’s Ministry of Oceans and Fisheries (MOF) to collaborate in fisheries management and trade.

In a statement, the DA said that the collaboration covers scientific and technical, economic and trade cooperation in fisheries and aquaculture.

“The Philippine-Korea bilateral on fisheries is expected to boost the collaboration between the two countries for the mutual benefit of its fishery sectors by enhancing cooperation in aquaculture and fisheries, and promoting fisheries trade and fishery-business investment,” it said.

The agreement was signed by Agriculture Secretary William D. Dar and MOF Minister Moon Seong-hyeok on Nov. 26 in Busan. The signing took place on the sidelines of is one of the 2019 commemorative summit of the Association of Southeast Asian Nations (ASEAN) with South Korea, which took place on Nov. 25-26.

The agreement follows the 2018 agriculture cooperation deal signed by President Rodrigo R. Duterte with the Ministry of Agriculture, Food, and Rural Affairs (MAFRA) during his official visit to Seoul.

Mr. Dar said the department has been seeking to improve market access of Philippine agricultural products to South Korea.

“DA is serious in its commitment to engage and strengthen bilateral relations with South Korea being one of the leading food importers in the world, requiring almost $30 billion food imports. South Korea is one of the most lucrative markets for Philippine agri-fisheries products,” Mr. Dar said.

According to the Philippine Statistics Authority (PSA), exports to South Korea hit $275.20 million in August. In the eight months to August, exports totaled $2.033 billion, up 22%, year-on-year.

The country’s major fishery exports to South Korea include tuna, abalone, sea cucumber, octopus, shrimp, prawn, seaweed, and carrageenan. — Vincent Mariel P. Galang

Gov’t union seeks uniform P16,000 starting salary for public sector

A GOVERNMENT workers’ union said it is pushing for a uniform P16,000 entry-level wage for public-sector workers.

The Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE) urged the Senate Wednesday to implement such a wage, which will “reduce the gap (between the) current salary (and) the family living wage. This will bring immediate relief to families of government employees suffering from economic hardship,” according to COURAGE National President Santiago Dasmariñas, Jr.

The “demand” was contained in a statement issued by the organization.

Based on the Department of Budget Management’s (DBM) Local Budget Circular 118, Salary Grade 1 wages for government workers vary by city, province and municipality. Special cities and first class provinces and cities pay P11,068 while 6th Class Municipalities pay P7,194 for starting positions.

COURAGE said such wages are well below the monthly family living wage (FLW) of P32,000. — Gillian M. Cortez

Brownout-free power seen requiring diversified sources, latest coal tech

THE Philippines should diversify and modernize its sources of electricity to achieve the kind of uninterrupted power supply Taiwan has attained, according to officials of power generation companies from the Philippines and Taiwan.

“Here we don’t usually experience brownouts, blackouts or whatever because if ever we encounter some unusual natural disaster like earthquakes we don’t restrict usage of electricity,” Ru-Chin Chou, deputy plant general manager of Taiwan Power Co.’s Lin Kou thermal power plant, told reporters when asked about how his industry deals with power interruptions.

He was briefing reporters from the Philippines in New Taipei City this week. He said unscheduled shutdowns are a rarity in Taiwan.

He added power interruptions are an occasion for “all politicians (to) step down.”

Taiwan Power, like all of the country’s power generators, is state-owned. It has 11 power plants in Taiwan, including three in remote islands.

The power plants in Lin Kou in northern Taiwan and Talin in the south use an ultra-supercritical boiler, the most advanced technology that significantly reduces carbon emissions.

Some of the other plants using high-emitting boilers are either up for upgrade or to be expanded using combined-cycle technology or one that is not limited to just coal as fuel.

“I just hope that the Philippines will follow the example of Taiwan in terms of modernizing power generation,” Litz M. Santana, Meralco PowerGen Corp. (MGen) vice-president for external affairs, said.

MGen has plans to build the country’s first ultra-supercritical plant in Atimonan, Quezon although it has yet to close a power supply agreement with a distribution utility.

“We need energy security by providing stable, reliable power supply, and how do we do it? By having a balanced mix of power supply coming from coal… you have to combat questions of carbon emission, you have to improve the technology like ultra-supercritical, which is already being used in most countries in Asia,” Ms. Santana said.

MGen also has aspirations to complete a solar farm, a wind power facility and is looking into a gas project.

“If you only rely on one technology or one fuel like gas, how will you have secure energy,” she said. — Victor V. Saulon

CTA upholds South Luzon Tollway stamp tax ruling

THE Court of Tax Appeals (CTA) affirmed the cancellation of P50.5-million tax assessment against South Luzon Tollway Corp. over a Documentary Stamp Tax (DST) deficiency, among others.

In a 12-page decision dated Oct. 28, the court, sitting en banc dismissed for lack of merit the appeal of Bureau of Internal Revenue (BIR) over the July 2018 decision and January 2019 resolution of the court in division, which cancelled the assessment and ordered the refund of P49.8 million in erroneously paid DST.

The en banc court upheld the division’s decision nullifying the assessment of South Luzon’s deficiencies for stating an indefinite amount and not having a due date for payment, noting that the court cannot ignore jurisprudence from the Supreme Court. The CTA in the earlier decision said BIR was obliged to refund the P49.8 million as it was undisputed by the parties.

BIR is contending that the issue of the lack of due date in the assessment notice was not raised by the company and failure to include the due date is not fatal for the collection of tax liabilities.

The company paid the P49.8 million billed to it in September 2015. The BIR issued a Formal Letter of Demand worth P50.6 million the next month.

The court also said the bureau’s right to due process was not violated.

“Unfortunately, petitioner fails to specify which tenet of due process did the First Division violate in rendering its decision,” the court said.

“In reviewing the case’s history, the Court En Banc is unconvinced that petitioner was given an unfair trial. It appears that all the necessities of due process were met,” it added.

The court said the company’s petition for review was filed on time and the bureau was given an opportunity to present its evidence and witnesses and the case was decided after a full-blown trial.

The decision was written by Associate Justice Jean Marie A. Bacorro-Villena. — Vann Marlo M. Villegas

ARTA: Path of unease to ease doing business

To enhance efficiency, the government has strengthened and broadened the Anti-Red Tape Act of 2007 by passing Republic Act (RA) 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018. The law took effect on June 17, 2018, intending to create programs that simplify requirements and streamline procedures in government transactions.

More than a year after its effectivity, the Anti-Red Tape Authority (ARTA), the agency mandated to oversee the implementation of the Act, along with the Civil Service Commission (CSC), the Department of Trade and Industry (DTI), and in coordination with other branches of government, promulgated the Implementing Rules and Regulations (IRR). The IRR was issued through Joint Memorandum Circular No. 2019-001, and became effective on Aug. 4.

What are the notable changes in the Act that the IRR seeks to implement?

The coverage of the law has been expanded to apply to all government offices and agencies in the Executive Department, including local government units (LGUs), government-owned or controlled corporations (GOCCs), and other government instrumentalities, whether located in the Philippines or abroad, including quasi-judicial bodies that provide services covering business and non-business related transactions.

To establish accountability and recognize good performance, a Citizen’s Charter is to be set up by all covered government agencies. It is to include the checklist of requirements, persons responsible for each step, the required fees, procedures to obtain the service, maximum time to complete the process, as well as the procedure for filing and handling complaints. All updates to the Citizen’s Charter must be posted not later than March 31st of each year to ensure compliance with its directives.

Each agency is required to classify all transactions and services pursuant to a set of criteria and to assign appropriate processing times based on the classification of the applications or requests. The maximum processing time imposed by the law are as follows: three working days for simple transactions, seven working days for complex transactions, and 20 working days for highly technical applications or those that pose a danger to public health, public safety, public morals, or public policy. In the case of inadvertence to include and classify a specific transaction or service, the excluded activity is to be interpreted as a simple transaction that must be processed within three working days. Thus, government agencies must thoroughly review the activities within their offices to avoid breach of responsibilities.

The maximum time prescribed may be extended only once for the same number of days, but the agency is required to notify the applicant in writing as to the reason for the extension and final date of release.

Failure without cause to render the government service within the prescribed processing time may give rise to administrative and criminal liabilities.

Fixing the maximum time to act on applications should greatly increase efficiency. However, for it to work, it is important to also consider the preliminary assessment or the evaluation stage in the required timeline to process the transaction. It is during the evaluation stage that additional or revised documents are requested by the processing officer. The mandated processing time, while ideal, can be misleading if it does not contemplate the extensive delays that may be experienced during the evaluation stage. Thus, the Citizen’s Charter should likewise set a maximum period for pre-processing the applications.

AUTOMATIC APPROVAL AND ITS CHALLENGES
A noteworthy part of the Act and the IRR is the rule on automatic approval or automatic extension of a license, clearance, permit, certification, or authorization. Under the IRR, the existence of all the following conditions warrants the automatic approval of an original application:

1. If a government office or agency fails to approve or disapprove an original application for a license, permit, certification, or authorization within the prescribed processing time;

2. If all required documents have been submitted; and

3. If all required fees and charges have been paid.

The acknowledgment receipt, together with the official receipt for payment of the fees, is deemed to constitute proof of approval, having the same force and effect of a license, clearance, permit, certification, or authorization.

This third requirement on payment of fees may have the effect of nullifying the benefits of the provision on automatic approval. More often than not, payment of the required fees or charges is made at the final step of the process. What remains after the payment is the mere ministerial work of issuing the certificate, license, or permit. However, as mentioned earlier, delays normally occur during the pre-assessment or evaluation stage. Hence, RA 11032, while promising, can become an empty assertion if the government agencies are unable to reengineer their transaction processes in order to act on applications more efficiently as the law intended.

Under the IRR, to avail of the automatic approval, it is incumbent upon the applicant to file a complaint with the ARTA. Once the ARTA has verified that the applicant has submitted all necessary documents and paid the required fees, it will issue a declaration of completeness and order the concerned office or agency to issue the approval, extension, or renewal of the license or permit deemed automatically approved under the Act. However, the IRR failed to mention how long the process to investigate and issue the declaration of completion should be concluded. One can only surmise if the timeline imposed on other agencies will equally apply to ARTA as chief regulator.

As with all other types of legislation, success depends chiefly on the political will to implement the law with persistence. A poor review and reengineering of operating procedures shortchanges the public. While RA 11032 seeks to ease doing business and to make delivery of government services efficient, it seems that only clerical transactions, such as issuance of permits and public documents, will benefit from the Act. All other deadlines in government services will have to contend with the proverbial Filipino time delay, and sadly, the public will have to manage their expectations and ease way from other alternatives, for now.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Cyril B. Pestilos is a Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 8845-2728

cyril.b.pestilos@pwc.com

Quid pro quo is standard practice in Philippine politics

Quid pro quo is a Latin phrase that literally means something for something. It is used very often in reference to an exchange of favors.

The phrase has been used frequently in the ongoing US House of Representatives’ impeachment inquiry into President Donald Trump’s effort to pressure Ukraine President Volodymyr Zelensky to investigate former Vice-President Joe Biden in exchange for military aid. The reason Mr. Trump’s political opponents are looking into the possibility of impeaching him is because getting a foreign government involved in US domestic politics is a federal crime in the US.

Quid pro quo deals are normal in politics anywhere. In the Philippines, politics is often a game of quid pro quo. During the 2016 presidential elections, Mr. Duterte said there were grounds for former President Gloria Macapagal Arroyo’s acquittal. He also repeatedly said he owed much to Mrs. Arroyo as she had made substantial contributions to his campaign funds.

Shortly after Mr. Duterte was elected president, the Supreme Court acquitted the former president of the charge of plunder. In an appreciation dinner held in her honor in July by her former colleagues in the House of Representatives, she attributed her acquittal to President Duterte. Addressing the President, Mrs. Arroyo said, “I thank you that when you became President, you provided the atmosphere in which the Court had the freedom to acquit me of the trumped-up charges by my successor and your predecessor.” That statement of gratitude strongly suggests a case of quid pro quo.

People associate Mrs. Arroyo with quid pro quo politics. Soon after Mrs. Arroyo assumed the presidency, the Ombudsman filed charges of plunder against Joseph Estrada, her immediate predecessor. A special division of the Sandiganbayan was created to try him. Sandiganbayan Justice Teresita de Castro was appointed chair of the special division. The special court found Mr. Estrada guilty of plunder and sentenced him to life imprisonment. After the trial, President Arroyo elevated Justice De Castro to the Supreme Court. That prompted Jinggoy Estrada, son of the former president, to claim that Justice De Castro’s promotion was a reward for her convicting his father. Many citizens saw it as a quid pro quo deal between President Arroyo and Sandiganbayan Justice De Castro.

In 2002 President Arroyo appointed her Chief-of-Staff Renato Corona to the Supreme Court and in 2010 named him Chief Justice. The latter appointment was in contravention of a provision in the Constitution barring the President from making appointments during her last two months in office. During his entire stint in the Supreme Court, Corona was perceived to have been partial and subservient to Mrs. Arroyo in cases involving her administration. The apparent partiality was one of the articles of impeachment submitted by the House of Representatives to the Senate. To many political pundits, it was another case of quid pro quo.

One other of Mrs. Arroyo’s appointees to the Supreme Court was Court of Appeals Justice Lucas Bersamin. In 2015, Justice Bersamin, to justify the grant of bail to Senator Juan Ponce Enrile, who was charged with a non-bailable offense of plunder, declared that “Bail for the provisional liberty of the accused, regardless of the crime charged, should be allowed independently of the merits of the charge, provided his continued incarceration is clearly shown to be injurious to his health or to endanger his life.”

I saw the ruling as Justice Bersamin’s way of providing justification for the grant of bail to Mrs. Arroyo who was also under arrest at the time for plunder but was detained in a hospital supposedly because of a life-threatening spinal disease. However, Mr. Duterte’s election rendered Justice Bersamin’s doctrine on bail extraneous as Mrs. Arroyo walked free sans legal rigmarole, thanks to the aforesaid atmosphere that Mr. Duterte provided.

Retired Supreme Court Chief Justice Artemio V. Panganiban once wrote in his Philippine Daily Inquirer column: “The sociological school of legal philosophy holds that to predict how a case would be decided (by the Supreme Court), one must consider the personality of the magistrate and the various stimuli attendant to a case per this formula: personality times stimuli equals decision (P x S = D). The personality of a magistrate includes intrinsic qualities like upbringing, education, relationships, etc. Stimuli refer to how he/she responds to externals like public opinion, peer pressure, religious leaders, medical condition, appointing authority, appointment sponsor, close friends, etc.”

That observation strongly suggests that justices of the Supreme Court sometimes decide not only on the basis of an objective interpretation of the law and the established facts but on personal considerations as well.

Could another Supreme Court decision be the quid and the selection of someone as the next Speaker of the House of Representatives be the quo? I have always wondered why the lightweight Lord Allan Velasco was a strong contender for the speakership in the 18th Congress. The speakership is a position of power and the person occupying it must be equal to the position. He or she must himself or herself be powerful lest he or she becomes expendable.

The speaker must be a person of gravitas. Before he aspires for the speakership, he should already be a person of achievements, have attained national recognition for his accomplishments, be a political giant and leader of a major political party, and have the staunch support of the president.

Many past speakers — from the Commonwealth years, through the post-World War II era, to the post-martial law period — were such men. Messrs. Sergio Osmena, Sr., Manuel A. Roxas, Jose Yulo, Eugenio Perez, Jose Laurel, Jr., and Ramon Mitra were political titans and leaders or stalwarts of their party before they were elected speaker. Messrs. Jose de Venecia and Manuel Villar were business tycoons befriended by the powers that be before they entered politics. They bankrolled the election campaigns of many congressmen before they sought the speakership.

Congressman Velasco is neither a political bigwig nor a business mogul. He was first elected representative of the lone district of Marinduque in 2010. He ran for re-election in 2013 but was defeated by Regina Ongsiako Reyes, daughter of the governor of the province, Carmencita Reyes. However, he was proclaimed the representative of Marinduque on Feb. 1, 2016 after the House Electoral Tribunal removed Regina Reyes from her seat in the House of Representatives for being an American citizen.

The fact is, the people of Marinduque preferred the scion of the political dynasty in the province of Marinduque over the son of retired Supreme Court justice Presbitero Velasco. If it were not for a technicality, Lord Allan Velasco would not even be in Congress. When PDP-Laban announced that it was nominating Lord Allan Velasco for the speakership, broadcast political commentators asked, “Who is he?”

Civil society groups’ call last week for the government to free Senator Leila de Lima from detention brought to mind the Supreme Court decision dismissing the senator’s petition to nullify her arrest on drug charges. Justice Presbitero Velasco penned the decision. Justice Antonio Carpio found Justice Velasco’s arguments inconsistent with those he (Velasco) used in many other cases. I discerned from Justice Carpio’s dissenting opinion that Justice Velasco performed legal contortions to keep De Lima, a vocal critic of President Duterte’s war on drugs, in jail.

That must have pleased the President who had said he wants Senator De Lima to “rot in jail.” Had the position of chief justice become vacant before Justice Velasco’s retirement, he would have been a strong candidate for the position. I wonder if son Lord Allan’s selection as Speaker-in-waiting was a consolation prize for retired Justice Presbitero Velasco — a case of quid pro quo.

 

Oscar P. Lagman, Jr. is a retired corporate executive, business consultant, and management professor. He has been a politicized citizen since his college days in the late 1950s.

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