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Palay output Q2 estimate pointing to 5.6% decline

PRODUCTION of palay, or unmilled rice, for the second quarter has been initially estimated at 3.86 million metric tons (MMT), down 5.6%, the Philippine Statistics Authority (PSA) said.

In its Palay and Corn estimates report for the quarter, PSA said domestic palay production from a year earlier was 4.09 MMT.

Its estimate for corn production in the second quarter was 1.15 MMT, down 10.2% from the year-earlier production of 1.28 MMT.

The price of palay, the form in which most domestic farmers sell their crop, has been on a downtrend due to the threat of competition from cheap foreign grain. The Rice Tariffication Law, which freed up rice imports by private traders who must pay a 35% tariff on most of their shipments, particularly on rice from Southeast Asia, is pressuring farmers to sell their harvest for less while also depressing future planting intentions.

Early July, the Bureau of Customs reported that it collected a total of P5.9 billion in tariffs from P1.43 MMT of rice imported by private traders flowing the implementation of the Rice Tariffication Law.

The average farmgate price of palay, or unmilled rice, fell 0.3% week-on-week during the fourth week of June to P17.85 per kilogram (kg), the PSA said.

The PSA said the average wholesale price of well-milled rice fell 0.1% week on week to P39.30. At retail, it fell 0.2% to P42.92 per kg.

The wholesale price of regular-milled rice fell 0.2% week on week to P35.39 during the period. At retail, the price decreased 0.3% to P38.56.

The farmgate price of yellow corn grain during the period declined 0.1% week-on-week to P13.98 per kg. The average wholesale price fell 1.2% to P18.30 and the retail price decreased 1.2% to P23.68.

The average farmgate price of white corn grain was stable week on week at P16.25. The average wholesale price fell 2.1% to P22.40, and the average retail price declined 1.4%% to P28.82. — Vincent Mariel P. Galang

DoE touts new funding for indigenous communities hosting power projects

THE Department of Energy (DoE) said the guidelines for indigenous communities to derive financial benefits from hosting of power generation plants and projects will soon take effect, and encouraged these communities to make appropriate preparations.

In a statement Monday, Energy Secretary Alfonso G. Cusi said the issuance of the guidelines is a “symbolic way” to mark the 25th year of implementation of the Energy Regulation (ER) 1-94 Program.

He said the DoE “recognizes the right of our tribal and indigenous communities to optimize available social development opportunities and preserve their critical role as the stewards of our energy resources, particularly where the power plants and/or the energy resource development projects are located.”

The Department Circular DC2019-06-0010 prescribes the “Administrative Operating Guidelines for the Availment and Utilization of Financial Benefits by the Indigenous Cultural Communities/Indigenous Peoples, pursuant to DoE Department Circular No. DC2018-03-0005.”

Under the circular, the National Commission on Indigenous Peoples (NCIP) is to endorse all legitimate indigenous cultural communities/indigenous peoples (ICCs/IPs) beneficiaries to the DoE within 30 days from receiving from them all the necessary requirements.

The DoE will then notify the concerned generation company and/or energy resource developer of the inclusion of the host ICCs/IPs for the remittance of their financial benefits. The policy enables the host to use the funds for social development projects.

Mr. Cusi said the arrangement with the ICCs/IPs further strengthens the DoE’s commitment “to boost their participation, cooperation and sustained partnership in power development projects.”

The DoE circular was published on July 12, 2019 and will take effect 15 days from its publication date.

Under the ER 1-94 Program, communities hosting power generation facilities or energy resources are entitled to one centavo per kilowatt-hour of the total electricity sales of generation companies or energy resource developers.

One of the major changes introduced by the guidelines is the direct remittance of financial benefits to host communities for their immediate utilization. The move to streamline the release of funding was meant to eliminate the bureaucratic process that hampers socio-economic development of the communities hosting the power plants. — Victor V. Saulon

Law signed deploying social workers attachés to major OFW markets

PRESIDENT Rodrigo R. Duterte has signed into law a bill requiring the presence of social welfare attachés in foreign labor markets with high concentration of Overseas Filipino Workers (OFWs).

Malacañang released to reporters on Monday copies of Republic Act No. 11299, which Mr. Duterte signed on April 17.

The new law amends Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, by adding a provision that requires the Department of Social Welfare and Development (DSWD) to deploy social welfare attachés to such labor markets.

The deployment sites will be determined in consultation with the Department of Foreign Affairs (DFA) and the Department of Labor and Employment (DoLE).

The social welfare attachés will “manage cases of OFWs and other overseas Filipinos in distress needing psychosocial services, such as victims of trafficking or illegal recruitment, rape or sexual abuse, maltreatment and other forms of physical or mental abuse, and cases of abandoned or neglected children.”

Their functions include to “respond to and monitor the resolution of problems and complaints or queries of OFWs and their families.”

The funding source for the law is the annual General Appropriations Act.

“The DSWD, in consultation with the DFA, DoLE, Department of Health, Philippine Overseas Employment Administration, Overseas Workers Welfare Administration and other relevant stakeholders, shall, within 60 days after the effectivity of this Act, formulate the necessary rules and regulations for its effective implementation,” according to the law.

The law takes effect 15 days after its publication in the Official Gazette or in a newspaper of general circulation. — Arjay L. Balinbin

Tax Amnesty: The continuing saga

This year, Game of Thrones — one of my favorite television shows — finally ended. I remember watching it for the first time eight years ago, finding it boring, and attempting to finish watching the first episode thrice. Since then, I got hooked until the last episode was aired this summer. Just like with any popular movie or television series, there were mixed reactions among fans over how the show ended. Some fans were happy but, of course, Game of Thrones received its fair share of criticism. Most unsatisfied fans wanted a remake with an ending they prefer.

Unlike Game of Thrones, Philippine tax amnesty is just reaching its climax.

The Bureau of Internal Revenue (BIR) has issued several memoranda to guide taxpayers on availing of the tax amnesty. What is left is the implementation of the one-year amnesty period on delinquencies and the two-year period on estate taxes. We all watched from the sidelines the year-long deliberations that led to the enactment of Republic Act (RA) No. 11213, or the Tax Amnesty Act. It was not an easy task for both houses of Congress, which drafted several versions before they finally agreed on the coverage, final rates, and basis. Hence, it was anticlimactic when the most-awaited part of the bill, the general tax amnesty, was vetoed by the President for having too many loopholes. Taxpayers were not happy, as most of them were hoping to simply pay the 3 or 5% general amnesty tax to wipe out all their exposure. Now, only those who have delinquent taxes are pleased and welcomed in the enactment of RA No. 11213.

The BIR faced its own challenges in drafting rules and regulations to properly implement the new law. In fact, for the estate tax amnesty, the BIR had to issue Revenue Memorandum Circular (RMC) 68-2019, which addresses the issues raised by taxpayers. The 10-page circular contains 40 questions and answers for specific concerns.

One notable issue discussed in RMC No. 68-2019 pertains to the means of filing in case of multiple transfers of property. RA No. 11213 requires that one Estate Tax Amnesty Return (ETAR) be filed for every stage of succession from the initial common property. Now, the ETAR may be filed in any Revenue District Office (RDO) having jurisdiction over the residence of any of the decedents. RMC No. 68-219 illustrates an example below: the property is in the name of Alpha, whose family is now survived by Delta. To effect the transfer of the property to Delta, RMC No. 68-2019 allows the filing of all four ETARs in Caloocan, Nueva Ecija, Samar, or Davao.

RMC No. 68-2019 also addresses situations where either an estate tax return or ETAR has been previously filed, but failed to declare all the properties of the decedent. The RMC rules that, in case a conjugal property was not included in the gross estate declared, the amnesty tax may still be availed of, provided that no other deduction will be allowed, except for the share of the surviving spouse. It is deemed that all the allowable deductions have been claimed in the original estate tax return or ETAR filed. In the illustrations provided, it is apparent that the heirs can avail of amnesty multiple times until all the properties are covered. It must be emphasized that the estate tax amnesty rate of 6% pertains to cases that are not yet considered delinquent. Otherwise, the rules provided by Revenue Regulations (RR) No. 4-2019 on tax amnesty on delinquencies will apply. However, if an estate has an existing estate tax delinquency case, but there is an undeclared property that is not included in the list of the properties covered in the existing estate tax delinquency, the heirs may avail of amnesty for such undeclared property. In this case, the ETAR will be filed in the RDO that issued the assessment for the estate tax that has become delinquent.

We are aware that family squabbles involving inheritance are common and that many cases have been filed in court. RMC No. 68-2019 also clarifies that even estates involving judicial settlement/last will of testament being disputed in the Courts can avail of estate tax amnesty. In such cases, the filer must submit a certified true copy of the Court’s resolution or a leave of court (or permission from the Court) with all other documentary requirements. However, only the Certificate of Availment (CA) is to be issued to the filer. The CA contains the inventory of the properties pending with the Court. An electronic Certificate Authorizing Registration (eCAR) will be issued only upon presentation of the final order of the Court.

Valuation of gross estate was another baffling concern prior to the issuance of RMC No. 68-2019. Estate tax rules require that the properties be valued at the time of death. Are records of property values in the 1940s, for example, still available today? In such cases, RMC No. 68-2019 resolved that the fair market value appearing in the tax declaration issued on the date of death or the succeeding available tax declaration issued nearest to the date of death shall be used to compute for the value of the property.

For the mode of filing, taxpayers must note that only manual filing of ETAR is allowed. Payment shall be one time, meaning that no installment is allowed and must, as a general rule, be made to Authorized Agent Banks. For cash payments amounting to P20,000 and below or the if the payment is through manager’s or cashier’s check, irrespective of the amount, payments may be made to the Revenue Collection Officer. If the heirs have no cash to pay for the amnesty tax, the BIR may allow partial or total withdrawal of the cash in bank of the decedent to pay for the estate tax amnesty; the bank must issue either a manager’s or cashier’s check with (For the Account of) the Bureau of Internal Revenue as the payee.

As the amnesty saga continues, issues of compliance and implementation have started to surface and are now being resolved. It cannot be denied that the overwhelming response and participation of taxpayers to speak up, raise their specific concerns, and seek clarification on the vague provisions of the rules implementing the Tax Amnesty Act shows that this law is indeed beneficial to many taxpayers. Now is the best time to start gathering documents to be able to take advantage and optimize this once-in-a-lifetime opportunity to have a clean slate.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Gemmalu O. Molleno-Placido is a senior associate of Tax Advisor & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

‘Solar Para sa Politika’

Among the promises of the Solar Para sa Bayan Corp. (SPBC) franchise bill now awaiting President Rodrigo Duterte’s signature are 24/7 electricity in far away villages, and cheaper electricity because the sun’s rays are free.

True, the sun’s rays are free, but the solar panels, the power conditioning unit, main panel, AC and DC disconnect, other components are not free. Transportation and installation in far away areas and connection to the grid are not.

Add to that the cost of a battery to extend the power for few hours at night, plus the cost of backup diesel gensets since solar does not generate power at night and hardly produces power on days with thick clouds and rain. Solar components plus battery plus gensets cannot be cheap and power stability is not assured.

In a site inspection by the Philippine and Rural Electric Cooperatives Association Inc. of some barangays in Occidental Mindoro served by SPBC in November 2018, they found that residents experienced an average of two- to three-hour brownouts plus frequent on-and-off power outages every day, resulting in damaged appliances, and that the rate charged started at a low P2.34/kilowatt hour (kWh) which later rose to around P11/kWh.

Instead of favoring one particular energy firm, we need more big conventional power plants. Compared to more stable economies in Asia, the Philippines has among the lowest installed power capacity and, by extension, among the lowest electricity generation. Our capacity in 2016 was just one-half of that in Thailand, Vietnam, and Taiwan (see table).

People who want “green energy” and do not want to use electricity from fossil fuels without putting up a rooftop solar system (and cut or murder nearby tall trees that provide shade and reduce solar output) can actually get their wish via the retail competition and open access (RCOA) provision of the EPIRA (Electric Power Industry Reform Act) of 2001 (RA 9136). Contestable customers can choose their own licensed retail electricity suppliers (RES) and specify that they should be provided only renewable energy like hydro, geothermal, biomass, solar, or wind. The price might be higher but they get what they want. This will also send a signal to power investors to develop more renewables because customers are willing to pay the higher price without the need for subsidies from all electricity consumers nationwide, without need for new legislation.

We need more market competition in power generation and retail supply. We need more big power plants, conventional and renewables, more gencos and let them compete for customers.

We should not have enacted a law that gives a guaranteed price for renewables for 20 years via feed in tariff (FIT) as this violates market competition and disempowers consumers — they cannot say “No” to additional charges like the FIT-Allowance slapped into their monthly electricity bill for 20 or 25 years.

The law is there — RE Act of 2008 (RA 9513) — and it resulted in the upward price distortion in energy prices.

We should not add more energy distortions by having that “Solar para sa Politika” franchise bill become a law. President Duterte should veto it.

Finally, the Supreme Court should lift its TRO on the Energy Regulatory Commission resolutions on RCOA’s implementation. The threshold for contestable customers should have been down to 500 kilowatts or lower by now. The number of competing RES should be plentier by now. And the choices of consumers for their power generators and suppliers should be many, not few and restricted.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

Seeking justice beyond The Hague

July 12, 2019 marked the third anniversary of the Philippine’s victory in its arbitration case against China over the South China Sea. Three years ago, the Philippines received the arbitral award from the Permanent Court of Arbitration in The Hague that favored Manila’s maritime claims over the West Philippine Sea and legally discredited China’s nine-dash line claims to the South China (which later became a “10-dash line” then “11-dash line”). The award upheld the Philippines’ rights to a full 200-nautical mile Exclusive Economic Zone (EEZ) in the West Philippine Sea.

Three years ago, too, no less than the President of the Philippines “unilaterally” decided to shelve the arbitral ruling — at first, to restore bilateral relations with China that has been severed when the Philippines brought China to the international court, and later, for “friendly” relations with China. The Filipino public was made to believe that it was necessary and urgent. But three years have passed and what was initially a stop-gap diplomatic measure or strategy became, over time, the Philippines’ pivot to China.

The President’s pivot to China produced confusing claims. Did it just aim to revivify relations with China? Or did it seek to be independent from the US? Or both? The Filipino public was confused, especially when the government declared to pursue these as essential to the pursuit of an independent foreign policy. But how can we pursue an independent foreign policy when we cannot even uphold the arbitral ruling! How can it be an independent foreign policy when we cannot uphold our own national interests?

What may be clear though is that the pivot quashed the country’s legal leverage against China over the highly disputed South China Sea. Without undermining the Build, Build, Build infrastructure program of the government care of China, the pivot sabotaged what could have been the country’s powerful legal and legitimate ammunition against China.

As a consequence, China became more aggressive, not only with its continuous and massive reclamation activities and military installations in the South China Sea — unmindful of international law and the arbitral ruling in favor of the Philippines. On June 9, a Filipino fishing boat was rammed by a Chinese ship, sinking it in Recto Bank (Reed Bank) in the West Philippine Sea. The President called it “a little maritime accident,” only to retract the statement after he received flak from the public. To add insult to injury, the President declared that the Chinese can fish in Philippine waters while speaking at the anniversary of the Presidential Security Group on June 26.

Taking up the challenge of the President about looking for a “formula to enforce the arbitral award without going to war with China,” Supreme Court Senior Associate Justice Antonio Carpio proposed nine ways to do so at the Ateneo Law School’s graduation ceremony on July 14.

First, the Philippines and Vietnam can enter into a sea boundary agreement on their overlapping extended continental shelves beyond the Spratlys area.

Second, the Philippines can enter into a similar sea boundary agreement with Malaysia on the adjoining EEZs between Borneo and Palawan.

PCA-CPA.ORG

Third, the Philippines, Vietnam, Malaysia, Indonesia, and Brunei can enter into a Convention declaring that, as ruled by the arbitral tribunal, no geologic feature in the Spratlys generates an EEZ and there are only territorial seas from the geologic features that are above water at high-tide.

Fourth, the Philippines can file an extended continental shelf claim in the West Philippine Sea beyond our 200-nautical mile EEZ off the coast of Luzon, where China is the only opposite coastal state.

Fifth, the Philippines can send on patrol its 10 new 44-meter multi-role response vessels that were donated by Japan for use by the Philippine Coast Guard.

Sixth, the Philippines can welcome and encourage the Freedom of Navigation and Overflight Operations of the US, UK, France, Australia, Japan, India, and Canada in the South China Sea, including the West Philippine Sea.

Seventh, the Philippines can send its own Navy to join the Freedom of Navigation and Overflight Operations of these foreign naval powers to assert, on behalf of the Philippines, that there is an EEZ in the West Philippine Sea belonging to the Philippines as ruled by the arbitral tribunal.

Eighth, the Philippines can invite Vietnam, Malaysia, Indonesia, and Brunei to conduct joint freedom of navigation operations in their respective EEZ facing the South China Sea.

Ninth, the Philippine Government can support private sector initiatives to enforce the arbitral award.

Obviously, war is not an option! These nine proposals, if and when pursued, can help enforce the arbitral award. More importantly, these nine proposals can provide legal and legitimate means beyond and outside of war in seeking justice beyond The Hague’s arbitral ruling. As the title of Justice Carpio’s speech to the Ateneo Law Schools’ graduating batch of 2019 says — “Follow the Rule of Law, But Aspire for the Rule of Justice” — we must follow the rule of law but we must also aspire for the rule of justice.

There can be one more other way to seek justice beyond The Hague — one that will require the support of the international community and one where the goal is to strengthen the national justice system so the “actions” of China can be checked-and-balanced and Chinese government can be made accountable for its “atrocities.” If the 18th Philippine Congress is serious about charter change, then this must be the right direction.

 

Diana J Mendoza, PhD, is Chair of the Department of Political Science at the Ateneo de Manila University.

Promoting Corporate Governance under the Revised Corporation Code

(First of three parts)

This is an abridged version of the talk I recently gave to the MAP Corporate Governance Committee officers and members on the Revised Corporation Code which was enacted into law on Feb. 20, 2019.

It had been almost 40 years since the old Corporation Code was enacted thus it became inevitable and imperative that the Philippines align with the rest of the world by updating its general law on corporations. Each amendment in the Code may fall under one or more of these objectives:

1. the adoption of international best practices on Corporate Governance (CG);

2. the use of technology for more ease of doing business;

3. the protection of minority stockholders rights;

4. the management and reduction of corporate risks; and

5. the inclusion of specific and effective enforcement provisions to:

a. enhance compliance; and

b. avoid regulatory capture.

I will deal with amendments under the first, third and fifth objectives as they relate to CG and how the Securities and Exchange Commission (SEC) can promote and enforce it. At the outset, the Code is replete with references to CG. For example:

In Sec 46 Contents of By-laws, private corporations are encouraged to include in their bylaws “(k) such other matters as may be necessary for the proper or convenient transaction of its corporate affairs for the promotion of good governance and anti-graft and corruption measures.” In Sec 179 (d) among the powers and functions of the SEC is precisely to “Promote corporate governance and the protection of minority investors, through among others, the issuance of rules and regulations consistent with international best practices.”

CORPORATIONS VESTED WITH PUBLIC INTEREST
The first major amendment concerning CG is in Sec. 22 where the term “corporations vested with public interest” first appears followed by this enumeration:

1. corporations covered by the Securities Regulation Code in Sec. 17.2:

a. whose securities are registered with SEC (publicly listed companies or those that have registered/issued shares/bonds to the public),

b. with assets of at least P50 million and having 200 or more holders of shares with 100 shares at least each (public companies);

2. banks and quasi-banks, non-stock savings and loan associations, pawnshops, money service business, pre-need trust and insurance and other financial intermediaries; and

3. other corporations engaged in businesses vested with public interest similar to the above, as may be determined by the SEC after taking into account relevant factors which are germane to the objective and purpose of requiring the election of an independent director.

Some provisions in the Code particularly apply to “corporations vested with public interest”: 1. Sec. 22 seeks to reinforce the meaningful presence of independent directors by requiring the “corporations vested with public interest” (to) “have independent directors constituting at least 20% percent.” Take note that in Sec. 179 (m), the SEC shall “(m) prescribe the number of independent directors and minimum criteria in determining the independence of a director.” Further, Sec. 22 elaborates that “independent directors shall be subject to rules and regulations governing their qualifications, disqualifications, voting requirements, duration of term and term limit, maximum number of board memberships and others requirements that the Commission will prescribe to strengthen their independence and align with international best practices.” Relatedly, Sec. 46 (f) states that bylaws may prescribe “the maximum number of other board representations that an independent director or trustee may have which shall, in no case, be more than the number prescribed by the Commission.”

2. Sec. 24 on Corporate Officers requires that “if the corporation is vested with public interest, the board shall also elect a compliance officer.”

3. Sec. 29 requires that corporations vested with public interest shall submit to their shareholders and the SEC, an annual report of the total compensation of each of their directors or trustees.

4. Sec. 31 provides that in case of a corporation vested with public interest, material contracts or related party transactions involving a self dealing director must be approved by at least two-thirds of the entire membership of the board, with at least a majority of the independent directors voting to approve.

5. Sec. 23 on Election of Directors or Trustees provides for voting through remote communication or in absentia in corporations vested with pubic interest notwithstanding the absence of a provision in the bylaws.

6. In Sec. 177, corporations vested with public interest shall submit to the SEC in addition, a director or trustee compensation report and a director or trustee appraisal or performance report and the standards or criteria used to assess each director or trustee.

7. Under Sec. 73, the SEC may require stock corporations which transfer and/or trade stocks in secondary markets to have an independent transfer agent.

DISQUALIFICATION, COMPENSATION AND OTHER PROVISIONS AFFECTING DIRECTORS OR TRUSTEES
Corporate Governance is essentially about the board of directors or trustees as the governing body of a corporation. Among the amendments to raise its level of performance is the expansion of Sec. 26 with more grounds for the disqualification of a director or trustee. In the old Code (Sec. 27), the grounds were limited to having been convicted by final judgment of an offense punishable by imprisonment exceeding six years, or a violation of the Code committed within five years prior to date of election or appointment. Retaining the five year-period, but changing the reckoning to date of conviction or administrative judgment, the grounds are:

a. Convicted by final judgment: of (1) an offense punishable by imprisonment for a period more than six years, (2) violation of the Revised Corporation Code, (3) violation of the SRC;

b. Found administratively liable for any offense involving fraudulent acts; and,

c. By a foreign court or equivalent foreign regulatory authority for acts, violations or misconduct similar to those enumerated in paragraphs (a) and (b).

Further, the last paragraph of Sec. 26 says — “The foregoing is without prejudice to qualifications or other disqualifications, which the Commission, the primary regulatory agency, or the Philippine Competition Commission may impose in its promotion of good corporate governance or as a sanction in its administrative proceedings.” Notably, Sec. 27 provides that “The Commission shall, motu proprio or upon verified complaint, and after due notice and hearing, order the removal of a director or trustee elected despite the disqualification, or whose disqualification arose or is discovered subsequent to an election. The removal of a disqualified director shall be without prejudice to other sanctions that the Commission may impose on the board of directors or trustees who, with knowledge of the disqualification failed to remove such director or trustee.”

Moreover, Sec. 160 makes Violation of Disqualification Provision; (Penalties) a criminal offense punishable by a fine ranging from P10,000 to P200,000 at the discretion of the court, and permanent disqualification from being a director, trustee or officer of any corporation. When the violation is injurious or detrimental to the public, its from P20,000 to P400,000.

In order not to disrupt board actions, Sec. 28, second paragraph, fixes a definite period or date when replacement of an end of term, removed, resigned or departed director should take place.

Regarding compensation, initially the by-laws should fix directors or trustees compensation. Otherwise, only stockholders representing the majority of outstanding capital stock or the majority of the members can fix the compensation of directors or trustees, at the meeting for this purpose, not exceeding 10% of net income before income tax. However, under Sec. 29, the directors or trustees cannot take part in the determination of their own per diems or compensation. Sec. 34 which allows the board, even without any by-law provision, to create special committees may offer a solution. Since the board is empowered to determine whether the committee is permanent or temporary in nature as well as its composition, a special committee composed of directors who are no longer up for reelection and top officers may be created to make the proper recommendation (directly to the stockholders) on per diems and compensation to be applied prospectively.

The Code modified Sec. 31 regarding self-dealing directors, trustees or officers.

Spouses and relatives within the fourth civil degree of consanguinity or affinity of any director, trustee or officer who may be involved in any transaction with the latter’s corporation, qualify said director, trustee or officer as self-dealing.

Moreover, Sec. 52 mandates that “A director or trustee who has a potential interest in any related party transaction must recuse from voting in the approval of the related party transaction without prejudice to compliance with the requirements of Sec. 31.” My view is that a director who does not recuse himself or herself may be subject to a sanction but the transaction would still be valid if compliant with all the conditions therefore.

To be continued

The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP

 

Atty. Teresita “Tess” J. Herbosa is of Counsel of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW) and former Chair of the Securities and Exchange Commission (SEC).

tjherbosa@accralaw.com.ph

map@map.org.ph

http://map.org.ph

How much do we know about 21st century warfare?

For today’s column, I abridged an article entitled “A New Generation of Unrestricted Warfare” by David Barno and Nora Bensahel. Lt. General David W. Barno, USA (Ret.) is a Distinguished Practitioner in Residence, and Dr. Nora Bensahel is a Distinguished Scholar in Residence, at the School of International Service at American University. Both also serve as non-resident Senior Fellows at the Atlantic Council.

Unrestricted warfare is today’s warfare. We need to know what it is so we can better defend ourselves against those who use it against us. Our knowledge of warfare is at best limited to conventional battles in the air, on the ground, and out at sea that could ultimately result in the use of weapons of mass destruction.

Well, that has since evolved.

“In 1999, two Chinese colonels wrote a book called Unrestricted Warfare, about warfare in the age of globalization. Their main argument: Warfare in the modern world will no longer be primarily a struggle defined by military means — or even involve the military at all.

“They were about a decade and a half before their time.

“Colonels Qiao Liang and Wang Xiangsui argued that war was no longer about ‘using armed forces to compel the enemy to submit to one’s will” in the classic Clausewitzian sense. Rather, they asserted that war had evolved to ‘using all means, including armed force or non-armed force, military and non-military, and lethal and non-lethal means to compel the enemy to accept one’s interests.’…. Qiao argued in a subsequent interview that ‘the first rule of unrestricted warfare is that there are no rules, with nothing forbidden.’ That vision clearly transcends any traditional notions of war,” wrote Bensahel and Barno.

“The barrier between soldiers and civilians would fundamentally be erased, because the battle would be everywhere. The number of new battlefields would be ‘virtually infinite,’ and could include environmental warfare, financial warfare, trade warfare, cultural warfare, and legal warfare, to name just a few. They wrote of assassinating financial speculators to safeguard a nation’s financial security, setting up slush funds to influence opponents’ legislatures and governments, and buying controlling shares of stocks to convert an adversary’s major television and newspapers outlets into tools of media warfare,” wrote Bensahel and Barno.

“…Qiao and Wang argued that the battlefield had fundamentally changed. It was no longer a place where militaries met and fought; instead, society itself was now the battlefield. Future wars would inevitably encompass attacks on all elements of society without limits. Military battles resembling those of 1991 might become secondary elements of conflict — if they even occurred at all.

“A lot has changed in the past 17 years…. But perhaps the most fundamental change to the way we live has been the explosive growth of the internet and our utter dependence on the cyber domain. When Qiao and Wang wrote their book, today’s cyber world was barely imaginable, and then only in the minds of visionaries and the most imaginative computer geeks…. “Today… the world, thoroughly depends on web connections built in cyberspace. The internet dominates all aspects of global trade, economics, communications, and even societies. And that makes Unrestricted Warfare even more relevant today than when it was published — because waging war without limits is now simpler and easier than even its authors could have envisioned. In 1999, the ability to assault all elements of an opponent’s society seemed to require the resources or sponsorship of a powerful nation state. Now, an increasingly interconnected world allows adversaries at keyboards — from states to terrorist groups to disgruntled citizens — to instantly vault oceans and continents to strike at any element of another nation and society without ever having to encounter defending military forces. A basement hacker in Sarajevo can target the City of London’s financial networks one moment and a Brazilian municipal power grid the next — and never change out of her pajamas.

“The nation will always need military forces to defend against foreign military threats. But the US armed forces… provide virtually no defense against the cyber vulnerabilities that affect every American business and household. And the ever-expanding Internet of things (IoT) only increases those vulnerabilities.

“These deep national and global vulnerabilities require us to think about conflict and warfare in a much more holistic way than ever before. We still think of warfare as primarily military in nature, channeling our 20th-century experience. But our adversaries can now bypass the military domain completely and can directly attack how we live our lives. And now, unlike in 1999, nearly anyone with a smart phone or laptop can join that fight.

“In an age of unrestricted warfare, how will we protect our country and our increasingly cyber-centric way of life at home from those same adversaries who can attack and disrupt us without firing a shot? Against those who realize that they no longer need to build an army, navy, or air force to wage a potentially catastrophic war…?

“Qiao and Wang warned us that these myriad new forms of non-military warfare were coming. Today we all now live on that battlefield — an unlimited zone of conflict that can reach each one of us in every aspect of our lives and work. The unconstrained notions of modern war articulated in Unrestricted Warfare have now arrived. Boundaries between soldiers and civilians, combatants and bystanders have all but disappeared…

Providing effective national security in this unprecedented environment of mass exposure requires our policymakers to plan for unrestricted warfare. This growing and nearly boundless threat requires us to develop better policies, better deterrent capabilities, and far more developed defenses. We can’t wait for the first big attack of the next war to throw society into chaos — rethinking what war now means in our interconnected world demands the attention of our civilian and military leaders today.”

The government should now sustainably apply what it wrote in its National Security Strategy to fund and obtain the means to properly defend ourselves. That needs, first and foremost, for our decision-makers to have the proper mindsets, cohesion and sense of urgency to get it done.

 

Rafael M. Alunan III currently chairs the Philippine Council for Foreign Relations and the Harvard Kennedy School Alumni Association. He is an Eminent Fellow of the Development Academy of the Philippines, and a former Secretary of the Department of Interior and Local Government.

rmalunan@gmail.com

map@map.org.ph

http://map.org.ph

San Sebastian shoots for win number two in NCAA

By Michael Angelo S. Murillo
Senior Reporter

ONE of the teams which had a winning debut in Season 95 of the National Collegiate Athletic Association, the San Sebastian Stags look to build on the momentum from it and win their second straight game when they take on the Mapua Cardinals in the middle game today at the FilOil Flying V Arena in San Juan City.

The Stags (1-0), one of the teams touted by many to be Final Four-bound this season, are to face the Cardinals (0-1) at 2 p.m. with an eye to keep their record spotless in the early goings of the brand-new season of the country’s oldest collegiate league.

Playing in the opener at 12 noon are the Letran Knights (1-1) against the Jose Rizal University Heavy Bombers (0-2) while the Perpetual Help Altas (1-0) battle the College of Saint Benilde Blazers (1-0) at 4 p.m.

San Sebastian is coming off a 31-point shellacking of JRU, 82-51, in its first game on July 9 where it dominated right from the get-go.

The Stags steadily built on the lead the rest of the way, punctuated by a 47-29 second half, to book their first victory in this year’s edition of the tournament.

Veteran guard RK Ilagan led the charge for San Sebastian, finishing with 25 points, boosted by five triples, to go along with five assists and two steals.

Alvin Capobres backstopped him with 16 points and six rebounds.

Allyn Bulanadi, who is still nursing an injured shoulder, was able to squeeze in some minutes in the game and finished with seven points.

With the rousing debut they had, San Sebastian coach Egay Macaraya said he welcomed and was proud of the effort that his players gave just as he expressed hope that they could maintain such high level of play and live up to the billing as one of the tournament favorites.

“Each player contributed in this game and hopefully we can continue that. It is nice to see our motion offense is clicking,” said Mr. Macaraya said post-game.

Meanwhile, out to stop the Stags are the Cardinals, who narrowly lost to Perpetual Help, 80-78, also on July 9.

Mapua was in the game in the fourth period, levelled with Perpetual Help at 69-all before the Altas made a ferocious 8-0 run to make it 77-69 with four minutes left in the game.

The Cardinals were able to come within a point, 79-78, with 8.2 seconds remaining but they would not able to go over the hump and salvage the win.

Center Warren Bonifacio paced Mapua with 15 points, followed by Cyril Gonzales with 14.

In other news, Jethro Mendoza of Emilio Aguinaldo College was named the first player to earn player of the week honors in NCAA 95 after helping the Generals to as 1-1 record last week.

The graduating guard drained the game-winning layup with 1.5 seconds to edge Lyceum on July 12.

He also played solid in their debut game against Saint Benilde on July 9 where they came close to completing a come-from-behind win before bowing down, 69-66.

Djokovic outlasts Federer in epic Wimbledon finale

LONDON — Novak Djokovic again proved the toughest nut for Roger Federer to crack, repelling all the Swiss threw at him in an epic duel to win a fifth Wimbledon crown in the longest singles final in the tournament’s 133-year history on Sunday.

The indefatigable 32-year-old withstood almost five hours of Federer brilliance, dredging his tank of mental and physical fortitude to prevail 7-6(5) 1-6 7-6(4) 4-6 13-12(3) in the first Wimbledon singles final decided by a tiebreak.

Serving for the match at 8-7 in a cliffhanger fifth set, Federer, three weeks before his 38th birthday, seemed poised to become the oldest man to win a Grand Slam singles title in the professional era and avenge back-to-back losses to Djokovic in the 2014 and 2015 Wimbledon finals.

But it was a case of so near yet so far as defending champion Djokovic, who must have felt he was playing most of the 15,000 fans as well as the 20-time Grand Slam champion over the net, fought off two match points before going on to snatch a 16th Grand Slam title.

Djokovic, who now leads Federer 26-22 head-to-head, is the first player since Bob Falkenburg in 1948 to win a Wimbledon men’s singles final having saved a match point and he described his victory as the “most mentally demanding” match he had ever been involved in.

Quite a statement for the sport’s ultimate warrior.

Nothing could separate the players in an intoxicating climax played in a soccer-like atmosphere and the match was already longer than Federer’s 2008 epic defeat by Rafael Nadal when Wimbledon’s new rule stipulating a deciding-set tiebreak at 12-12 kicked in.

Both players looked out on their feet but, as he did in the day’s two other tiebreaks, top seed Djokovic proved more steadfast.

A sublime backhand left Federer swishing at air to put the Serbian 6-3 ahead. There was confusion as Djokovic’s first match point was replayed after a Hawkeye intervention.

But there was no escape for a weary Federer who framed a forehand so badly the ball almost ended in Row Z, ending four hours 57 minutes of unforgettable drama.

It was a crushing blow for Federer who struck 94 winners to Djokovic’s 54 but did not take his chances. As well as the match points he also had a set point in the third.

Djokovic is now level with Bjorn Borg in fourth spot on the all-time list of men’s winners at Wimbledon and is only four Slams behind Federer, and two shy of Nadal.

“You have to keep reminding yourself that you’re there for a reason and that you are better than the other guy,” Djokovic said, when asked how he had pulled victory out of the fire.

“I’m just obviously thrilled and overjoyed to be sitting here as a winner. I was one shot away from losing the match. This match had everything. It could have gone easily his way.

“I think this was the most exciting and thrilling final I have ever been part of.”

FOREHAND MISTAKE
Federer held serve to stay alive seven times in the decider.

Djokovic’s nerve failed him at 7-7 when he double-faulted on his way to dropping serve.

Victory was in the palm of Federer’s hand at 40-15 and the frenzied crowd were preparing their salute.

But Federer hit an edgy forehand out on his first matchpoint, then left the door ajar on his second and Djokovic whipped a forehand past him at the net.

Eight service holds then sent the match into the tiebreaker which, almost inevitably, Djokovic dominated.

“It was a great match, it was long, it had everything. Novak, congratulations, man, that was crazy,” Federer said on court, disguising the heartache he must have felt.

Federer was the more threatening player in the sizzling opening set but failed to convert the one break point on offer when he missed a bread-and-butter forehand in the fourth game.

He then led 5-3 in the tiebreak but a succession of loose strokes allowed Djokovic to snatch it.

After the intensity of the first set, the second was a let-down as Djokovic went flat, winning only 12 points.

He re-focussed but with Federer winning around 80% of first-serve points it felt like Djokovic was hanging on.

Federer had a set point when Djokovic served at 4-5 but again his failure to convert came back to bite him.

Djokovic led 5-1 in the ensuing tiebreak and although Federer hit back to 5-4, the top seed capitalized on more errors by the Swiss to restore his one-set lead.

Federer finally dropped serve after nearly three hours of perfection on his delivery but it did not matter as he had more or less wrapped up the fourth set by then. — Reuters

Strycova, Hsieh take Wimbledon women’s doubles

LONDON — Czech Barbora Strycova completed a memorable Wimbledon as she partnered Hsieh Su-wei to the women’s doubles title on Sunday, beating Canada/China duo Gabriela Dabrowski and Xu Yifan 6-2 6-4.

After the spine-tingling drama of the earlier men’s singles final — the longest in the tournament’s history — Strycova and her Taiwanese partner finally got on court to bring the curtain down on the fortnight with a straightforward victory.

They became the first team to lift the doubles crown at Wimbledon without dropping a set since Serena and Venus Williams in 2009.

Strycova, 33, had also become the oldest Wimbledon singles semifinal debutant when she lost to Serena on Thursday.

It was great day for Taiwanese players with Latisha Chan teaming up with Croatian Ivan Dodig to win the mixed doubles, beating Latvian Jelena Ostapenko and 42-year-old Swede Robert Lindstedt 6-2 6-3 in the final. — Reuters

Green Archers climb the PFL ladder with big win over Global

GREEN ARCHERS United FC climbed to third spot in the standings of the Philippines Football League (PFL) following its big 9-0 victory over Global Cebu FC on Sunday at the Philippine Football Federation National Training Center in Carmona, Cavite.

At fourth place in the race entering the match, the Archers padded their push with a dominant showing versus Global to earn the full three points that pushed them to 14 points off four wins, two draws and two losses, overtaking Stallion Laguna FC (3-2-2) and 11 points.

John Celiz scored four goals to lead GAU to the win. All of his goals — 13’, 18’, 39’ and 45’ — came in the first half to help his team to practically put the game away at that point.

Marvin Angeles (52’ and 62’) and Roy Kent Bedia (80’ and 90’) had a brace each while Fredy Lobe Mbang (55’) accounted for the other goal.

The defeat sent Global to back-to-back losses and a record of 1-0-5 and three points, good for sixth place in the seven-team field.

Defending champion Ceres-Negros FC leads the pack with 19 points and a record of 6-1-0, followed by Kaya FC-Iloilo at 6-1-1 (19 points), Stallion is at fourth, Mendiola FC 1991 (1-1-4) at fifth with four points and Philippine Air Force FC (0-1-7) at seventh with a point. — Michael Angelo S. Murillo

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