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Fundador Supremo 18 is named ‘world’s best brandy’

FUNDADOR SUPREMO 18 recently bested some of the world’s top brands to win the coveted “Best Brandy in the World 2019” title at the International Wine and Spirits Competition (IWSC). Since Fundador Supremo Oloroso 18 is aged in special oloroso sherry casks, the brandy stands out with its aromatic warm, round notes of dried fruit and roasted nuts combined with smooth, strong, intensive hints of vanilla, walnuts, and dried fruit, while notes of wood stand out and provide a very elegant and lingering finish. The Fundador Supremo Sherry Cask Collection is comprised of three unique expressions of Fundador Solera Gran Reserva brandy aged in 12-, 15-, and 18-year-old sherry casks.

Philippine stocks may bounce back into bull market on earnings — analysts

PHILIPPINE bulls see the nation’s stock index climbing back to 8,000 later this year as corporate profits recover and economic growth accelerates.

Earnings of companies in the benchmark gauge grew faster in the second quarter, supporting expectations of double-digit expansion this year, according to analysts at COL Financial Group, Inc. and First Metro Investment Corp. GDP growth should pick up from a four-year low in the second quarter as inflation continues to cool while the government ramps up spending, they said.

“The second-quarter results give us more confidence that the market will hit our target,” said First Metro’s Cristina Ulang, who forecasts earnings to grow 10% this year and for the index to reach 8,400 to 8,800 by the end of 2019. “We should see more improvements in earnings and the economy as government spending steps up.”

After breaking into a bull run that sent the Philippine Stock Exchange index to a 16-month high in July, the benchmark measure slumped 7.4% and closed at 7,747.38 on Tuesday as the trade war between the US and China escalated. Slower-than-expected second-quarter Philippine economic expansion and another round of rebalancing, raising the weighting of China shares in the MSCI Index, also added to the weakness. The index rose 1.3% to 7,847.50 at the close Wednesday, the biggest gainer among major gauges in Asia.

After getting cut by more than half to 4.34% in 2018 when margins and consumer spending were squeezed by rising inflation, earnings per share of companies in the Philippine Stock Exchange index are forecast to grow by 14.3% this year, the fastest pace since 2012, according to data compiled by Bloomberg.

“It’s safe to keep our targets right now for there’s nothing extremely negative,” said April Lee-Tan, research head at COL Financial. “The second-quarter results are just right and it supports our outlook that earnings will get better.”

Ms. Tan forecasts the benchmark index will reach 8,600 this year on a prediction that earnings will expand 13%. Property companies and banks are likely to sustain strong results while cooling inflation will benefit consumer-related companies, some of which had some earnings disappointments, such as Jollibee Foods Corp., she said.

More than $23 billion in Philippine stock market value was erased from last month’s peak through Tuesday, while overseas funds withdrew almost $140 million over the same period. From a peak of 16.9 times 12-month estimated earnings in July, the outflows helped trim valuations to 15.6 times, a three-month low.

“Corporate earnings are showing resilience and will hit double digits this year — that’s why the index bounces each time it hits the 7,700 level,” Ms. Ulang said. “Earnings aren’t bad so every dip is a buying opportunity.“

Still, “a climb above 8,000 will be unsustainable if government spending and economic growth don’t pick up,” said Rachelle Cruz, an analyst at AP Securities Inc. “The trade war will also be a constant headwind.” — Bloomberg

Tencent launches WeChat for drivers

HONG KONG — Tencent Holdings on Monday unveiled a version of its popular social media app WeChat tailor-made for drivers with state-backed Chinese carmaker China Chang’an Automobile Group, marking a further foray into transportation solutions.

China’s most popular messenger, with more than 1.1 billion users, will be embedded in new car models coming to the market later this year, the two companies said at the annual Smart China Expo in Chongqing.

While the mobile app offers services such as payment and entertainment, the car version will have limited functions based on voice control and a button on the wheel, allowing the driver to send or receive messages and make calls while driving, and integrate Tencent Map’s navigation service, Tencent said.

Tencent, which is trying to transform itself from a consumer-oriented social and gaming firm to an enterprise service provider, said in a statement it had secured partnership agreements with 21 automakers including BMW, Mercedes-Benz and Audi to roll out solutions for connected cars on 45 models.

China’s state-run news agency Xinhua said on Monday 530 deals worth 817 billion yuan ($115.2 billion) had been signed at the Smart China Expo. — Reuters

How PSEi member stocks performed — August 28, 2019

Here’s a quick glance at how PSEi stocks fared on Wednesday, August 28, 2019.

 

Slower price increases bring some respite to poor households

Slower price increases bring some respite to poor households

Senate seeking accounting of RCEF disbursement

THE Senate Committee on agriculture and food was told at a hearing Wednesday that very little of the initial release of funds for the Rice Competitiveness Enhancement Fund (RCEF) went to farmers, with 80% captured by the Department of Agriculture (DA) National Rice Program.

The Department of Budget and Management (DBM) in December 2018 released P5 billion for the RCEF, a component of the Rice Tariffication Law which by law is entitled to P10 billion a year from rice import tariffs, of which Agriculture Secretary William D. Dar said P4 billion was allocated to the National Rice Program.

“With respect to the P4 billion initially released to the Department in December last year, it is reported by our officials that around P2.8 billion has been utilized for farm mechanization; of which P2.75 billion was spent on production-related farm machinery,” Mr. Dar told the panel on Wednesday.

“P241 million for small-scale irrigation facilities was given to 6,658 farmer groups and cooperatives in all regions in the country; roughly P1 billion went for the same program, benefiting 181,526 farmers; the remaining P200 million had been spent for buffer stocking for quick response.”

The Rice Tariffication Law was enacted in February, going into the books as Republic Act No. 11203.

The DA added that the DBM sourced the P5 billion from unprogrammed funds, which it said may be used fully or partially for rice programs.

Senator Cynthia A. Villar, the committee chair, also asked the DA to report on the utilization of the P7-billion budget for the National Rice Program.

Alam ko may P7 billion kayong Rice Program, dapat ‘yun ang ginamit niyo pero ang ginamit niyo P4 billion ng RCEF (I know you have P7 billion in funding for the Rice Program, but you ended up using P4 billion from RCEF),” she said. “Wala naman ditong ibinigay kung san dinala ‘yung P7 billion. (I have yet to see an accounting of the P7 billion)” — Charmaine A. Tadalan

DA studying financing plan for direct palay buyers

THE Department of Agriculture (DA) said it is considering providing low-interest financing for rice inventory purchases by entities seeking to source palay, or unmilled rice, directly from farmers.

“We’ll provide traders, cooperatives, local government units and other stakeholders a new inventory financing program from LANDBANK at 2% interest, provided they buy directly from farmers,” Agriculture Secretary William D. Dar said during a public hearing on the implementation of the Rice Tariffication Law.

Mr. Dar said that he will also look into restoring the palay buying price to P17 per kilo, from P20.70 for farmer organizations, and P20.40 for individual farmers with incentives added. He added P17 will also be the basis for the new financing program.

“We will process this but that is the direction,” he said in a chance interview.

“The incentive system was (offered) during the crisis situation in 2018, so I think we will have to revisit that formally in the NFA [National Food Authority] council so that during this period we can cover and really buy more palay at P17 per kilo,” he said.

The incentive system was implemented in October 2018, which added a P3.00/kg buffer stock incentive on top of the P0.20/kg drying, P0.20/kg delivery, and P0.30/kg Cooperative Development Incentive Fee.

Asked to comment, Samahang Industriya ng Agrikultura (SINAG) Chairman Rosendo O. So noted that the NFA should be able to absorb the entire domestic harvest, with the season due to begin next month.

Ang harvest time talaga kasi is next month. Dapat kasi ngayon yung mga binebenta (palay) kaya i-absorb ng NFA… kasi konti lang ito kasi may P1 billion pa sila… so kung may ganong problema kailangang pumasok ang NFA,” he said. (The harvest is next month. Palay sold today should be absorbed by the NFA… it’s only a small volume and the NFA still has P1 billion… if there are problems in selling palay, the NFA should step in.) — Vincent Mariel P. Galang

Poultry farmers see possible shift away from pork consumption if ASF fears spread

THE poultry industry said it expects sagging prices to be supported by any shift away from pork consumption if a still-unconfirmed disease detected in pig farms spreads beyond its current containment area.

“In the next few weeks… it will become clear as to the impact (of the hog disease), but there is no doubt… there will be an impact because of substitution,” United Broilers and Raisers Association (UBRA) President Elias Jose M. Inciong said in a phone interview.

“I expect chicken prices to largely move independently of hog, unless (the hog disease impact) worsens,” he said.

Poultry have decreased in the past two weeks due to competition from imports. He said average prices for regular-sized chicken fell to P100 per kilo from P104 previously, while the average price for prime-sized chicken fell to P103.93 from P106.63.

Magulo kasi ngayon ang trade dahil nga atras abante ang mga growers dahil mataas ang inventory ng imported. Syempre they are not as confident about loading. Pag mataas ang price signal naglo-load, pagni-nerbyos, aatras” (Growers have no firm view of the market because imported chicken inventories are high. When price signals are pointing higher they load up on production but they can reverse themselves at the slightest sign of worry about the market).

According to the National Meat Inspection Service (NMIS), imported dressed chicken in cold storage amounted to 21,905.8 metric tons (MT) as of July 22, 2019, while domestically-produced dressed chicken amounted to 8,976.84 MT. Imported supply was 40% higher year-on-year.

The Department of Agriculture has not yest ruled out several suspected diseases currently affecting the backyard hog farm sector, nor has it identified the areas affected. News reports from Taiwan last week placed the outbreak in Rizal and Bulacan. The reports also said Taiwan authorities have imposed special baggage checks on travelers from the Philippines to guard against the possible entry of African Swine Fever (ASF).

The DA said it has started to cull hog populations in affected areas and imposed restrictions on the movement of live animals. It expects lab results to confirm the disease in a few weeks.

“In due time we will tell the public… but even before the arrival of the confirmatory lab test results, as I’ve said (we will take) all preventive measures, all quarantine measures, all food safety measures are now in place nationwide,” Agriculture Secretary William D. Dar told reporters on Wednesday. — Vincent Mariel P. Galang

PWDs to be granted 5% discount on staples

PERSONS with disabilities (PWDs) will be entitled to a 5% special discount on basic necessities starting next month, according to the latest regulations released by the Bureau of Internal Revenue (BIR).

BIR issued Tuesday Revenue Regulations (RR) no. 9-2019, amending RR no. 5-2017, granting PWD a 5% special discount on the regular retail price of basic necessities and prime commodities. They are not exempt from 12% value-added tax (VAT).

“Every PWD shall enjoy a special discount of five percent (5%) of the regular retail price, without exemption from the value-added tax (VAT) of basic necessities and prime commodities,” the BIR said in a statement.

The discount is limited to purchases not exceeding to P1,300 “per calendar week without carry-over of the unused amount,” it said.

The items purchased should only be for the PWD’s own consumption, it said.

The regulations will be effective as early as next month or 15 days after its publication in the Official Gazette or in any two newspapers.

Basic necessities were defined as goods “vital to the needs of consumers” while prime commodities are goods that are “essential” to them.

Necessities include rice, corn, root crops, bread, fresh, dried or canned fish and other marine products; fresh pork, beef and poultry meat; fresh eggs, potable water in bottles and containers; fresh and processed milk; fresh vegetables and fruits; locally manufactured instant noodles; coffee, coffee creamer; sugar, cooking oil, salt, laundry soap, detergent, firewood, charcoal, candles, household liquefied petroleum gas and kerosene.

Meanwhile, prime commodities include flour, dried, processed or canned pork, beef and poultry meat; dairy products not falling under basic necessities; onions, garlic, vinegar, patis, soy sauce, toilet soap, fertilizer, pesticides and herbicides; poultry, livestock and fishery feeds and veterinary products; paper, school supplies, nipa shingles, sawali, cement, clinker, GI sheets, hollow blocks, plywood, plyboard, construction nails, batteries, electrical supplies, lightbulbs and steel wire.

The regulations were signed by Finance Secretary Carlos G. Dominguez III on Aug. 8 and also by BIR Commissioner Caesar R. Dulay.

Republic Act. No. 20754 or An Act Expanding the Benefits and Privileges of PWD entitles PWDs to a 20% discount and VAT exemption on medicine, hotel and restaurant services, theater and concert tickets, among others.

Currently, PWDs also enjoy a 20% discount and VAT exemption on medical and dental services and domestic air and sea transportation fares, land transportation fare, and funeral and burial services. — Beatrice M. Laforga

DoE not ruling out single entity bidding for entire 2,000 MW of renewable energy on offer

THE Department of Energy (DoE) will allow single entities to bid for the entire 2,000 megawatts (MW) of renewable energy capacity that it plans to auction in order to encourage the development of clean power sources, an official said.

“It’s open. Why would you disqualify?” Energy Undersecretary Felix William B. Fuentebella told reporters on Wednesday on the sidelines of the Philippines Infrastructure Conference at Manila Marriott Hotel in Pasay City.

The new renewable energy (RE) capacity will be through a proposal by the DoE to set what it calls “green energy rate.” Energy Secretary Alfonso G. Cusi announced in a forum last month that the rate for the renewables would be competitive with current market rates.

He clarified that the green energy rate is different from the feed-in tariff (FiT) program and will not be subsidized by consumers.

The FiT scheme was meant to encourage the development of renewables by giving developers a fixed rate for the energy they produce. The rate is higher than the prevailing cost of electricity, with consumers subsidizing the rate by paying a FiT “allowance” tucked in their monthly power bill.

“Instead, the green energy rate will support the RE generators with securing PSAs (power supply agreements) and selling their energy through the establishment of a fair baseline price,” Mr. Cusi has said.

Mr. Fuentebella said the agency is awaiting the recommendation of the National Renewable Energy Board (NREB) on the auction mechanism. Mr. Cusi had said the board is expected to submit its recommendations “in the months ahead.”

Asked about the timeline for the framework and its target issuance, Mr. Fuentebella said: “This year.”

“The DoE is looking into the qualifications. Basically these should be renewable energy developers of good standing but as far as putting in a cap or a disqualification, we have not discussed it yet,” he said.

He dismissed fears that one entity could end up cornering the entire capacity to be auctioned, saying developers that offer a low rate upfront but put in an escalation clause for the rates in future years will be subject to review. He said the Energy Regulatory Commission (ERC) could end up setting the baseline rate.

Mr. Fuentebella left questions unanswered on how the 2,000 MW target capacity will be distributed among the country’s grids. He added issues such as whether hybrid RE sources would be included, or whether solar battery storage would count into the capacity to be auctioned. — Victor V. Saulon

Double trouble? A drawback to a taxpayer’s double invoicing system

In taxation, it is a basic rule that every transaction must be supported by a valid and relevant proof to establish the existence of either a taxable or non-taxable event. However, no matter how many stacks of documents you keep, if these do not comply with the requirements of the tax laws, they will not serve their purpose.

For value-added tax (VAT)-registered taxpayers, compliance with the invoicing requirements, for both sale and purchase transactions, is a must to determine if: (1) the seller has reported the output tax due on the sale; and (2) the buyer is entitled to claim the input tax credit from the purchase.

The tax law provides the following invoicing requirements for VAT-registered taxpayers:

1. A VAT invoice for every sale, barter, or exchange of goods or properties; and

2. A VAT official receipt for every lease of goods or properties and every sale, barter or exchange of services.

In various cases, the Supreme Court has concluded that these documents should not be confused to refer to the same things or be used interchangeably.

In the case of VAT assessments/investigations, the taxpayer must submit relevant documents necessary to support all covered transactions.

Failure to comply with these requirements may result in drawbacks such that if the subject taxpayer is the buyer/purchaser, the Bureau of Internal Revenue (BIR) may have a basis to disallow the input tax claimed as credits against the output tax due. On the other hand, if the subject taxpayer is the supplier/seller, the BIR may impose penalties, which can lead the taxpayer to a separate investigation known as “Oplan Kandado” conducted against those who have deliberately failed to issue invoices or official receipts to document their transactions.

If, however, the case involves the issuance of both an official receipt and an invoice for the same transaction, can the taxing authorities hold the taxpayer liable for deficiency taxes or penalties?

In a case docketed as Court of Tax Appeals (CTA) No. 9217 dated Aug. 17, 2018, the CTA confirmed that nowhere in the Tax Code does the law allow imposing the 12% VAT twice on the same transaction as a consequence of a taxpayer erroneously issuing both a VAT official receipt and a VAT invoice to document one sale.

The CTA’s decision is anchored on Section 113(D) of the Tax Code which specifically provides for the consequences of erroneously issuing a VAT invoice or VAT official receipt, quoted as follows:

“(1) If a person, who is not a VAT-registered person, issues an invoice or receipt showing his Taxpayer Identification Number (TIN), followed by the word ‘VAT’:

(a) The issuer shall, in addition to any liability to other percentage taxes, be liable to:

(i) The tax imposed in Section 106 or 108 without the benefit of any input tax credit; and

(ii) A fifty percent (50%) surcharge under Section 248(B) of this Code;

(b) The VAT shall, if the other requisite information required under Subsection (B) hereof is shown on the invoice or receipt, be recognized as an input tax credit to the purchaser under Section 110 of this Code.

(1) If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT-exempt transaction, but fails to display prominently on the invoice or receipt the term ‘VAT-exempt sale,’ the issuer shall be liable to account for the tax imposed in Section 106 or 108 as if Section 109 did not apply.”

From a cursory reading, it is evident that the consequences listed above do not apply to taxpayers issuing double billing documents for transactions subject to VAT. While that is true, the taxpayer nonetheless has the burden of establishing that the documents, though issued simultaneously, pertain to a single transaction and that the basis of reporting is proper.

Thus, the mere issuance of double billing documents should not cause more trouble for the taxpayer who rightfully paid what is due. In form, two documents were issued, but in essence, both documents pertain to the same transaction. As the off-cited accounting principle states, cliché as it may sound, substance should prevail over form.

On a related note, though not covered in the court decision, the tax bureau may have basis to question the issuance of both official receipt and sales invoice to cover the same transaction since there is a possibility that the customers, on the other end, may have claimed the input tax twice based on the two supporting documents. Thus, the burden of proof rests upon the taxpayer to establish the fact that no double input tax was claimed by its customers. Perhaps a sworn declaration from the customers to support this claim may suffice as proof.

Of course, double invoicing will likely raise a red flag on the suspicion that the government is being cheated out of revenue taxes. All it takes is for two conniving parties to issue an invoice with a lower value for tax purposes and secretly issue a second one with a higher value for billing purposes. However, it is a different case where the taxpayer has rightfully declared and paid what is due to the government. After all, there is no revenue loss on the part of the taxing authority. The only mistake that the taxpayer may have committed is a mere error in the documentation — a minor slip up that may, at worst, deserve only reasonable penalties.

 

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.

Mary Rose Lara is a senior consultant at the Tax Services Department of Isla Lipana & Co., a Philippine member firm of the PwC network.

+63 (2) 845-2728

mary.rose.lara@pwc.com

Social media

About two weeks ago, I had lunch at a culinary school in Makati City. I was seated somewhere between the main door and the buffet table. From where I sat, I could clearly see the main bar and the staff behind it — as well as the school computer, which was, the whole time I was there for lunch, logged on to the social media application Facebook.

As a patron, I didn’t really mind the staff being on FB since it didn’t affect the food quality or the level of service given to me at the time. It was a lunch buffet, after all, so I served myself by standing up to get my own food. Other than the occasional request for a glass of water to drink, or napkins for wiping, or the bill to pay, I didn’t really need the staff to wait on me.

I had a similar experience last month in a restaurant in Baguio City. The restaurant computer was likewise logged on to FB the whole time I was there for dinner with my family. In both occasions, in Baguio and in Makati, I was seated behind the staff but facing the computer screen, and could clearly see that while on duty and during restaurant hours, staff were busy on social media.

Maybe some establishments don’t really mind staff doing FB as long as it doesn’t interfere with the work, and customers don’t complain. I am uncertain if doing FB was actually part of the job. It could be; I didn’t ask. But I suspect it wasn’t, and could only wonder how much of staff time and attention, as well as company resources, were spent on social media while at work.

Perhaps this trend is inevitable. We are in the era of “data connection,” and one can assume that access will eventually further improve and broaden, and perhaps become cheaper. More services are now becoming available online. Even retail, as well as financial transactions, have transitioned. Public services have also moved towards electronic rather manual transactions.

Just by looking around one will realize that people nowadays are just too busy looking down at their mobile phones and fiddling with it, wherever they are. It makes no difference whether they are driving, riding a motorcycle, or crossing the street, or having a meal with other people. Even during meetings, attention is split between “being” in the meeting and a mobile device.

Mobile phones have truly evolved, with fewer calls being made, it seems. What used to be a mobile or smartphone’s primary function, to make and receive calls, has become irrelevant, if not a nuisance. People now prefer messaging to calls, and “interacting” with others through “social media” rather than seeing them in person. Even e-mail is no longer as prevalent.

I make no judgment whether this is good or bad for people, in general. On one hand, with social media, we can communicate and “keep in touch” even with people that are physically very far from us. One can be halfway across the globe and still maintain a “presence” in his own home country. And unless you indicate where you are exactly, people wouldn’t know where you are.

On the other hand, I am sure something is bound to give, or get lost, as people opt to interact more through electronic means rather than in person. Good manners, right conduct, etiquettes, social graces, and the capacity and ability to engage in conversation, or to host and attend social functions appear to have been impacted by the advent of the social media age.

Then, there is my concern with respect to its impact on labor productivity. The Philippine Star, citing a mid-August global survey by market research company Global Web Index, reported that “the Philippines is the leading country that spends the most time on social media globally” — an average of four hours and five minutes daily. The other 44 countries in the survey averaged only two hours and 23 minutes daily on social networks and messaging.

In the top five, the report noted, were the Philippines, Brazil, Colombia, Nigeria, and Argentina. The Philippines was reported to have been topping the list for seven years, and over the seven-year period, the average time spent by Filipinos on social media has gone up from over two hours daily in 2012 to over four hours daily in 2016-2018.

“A look at the trended data here suggests that we might be approaching saturation in social media consumption,” Global Web Index was quoted as saying in its report. “This is likely a result of many internet users having a better awareness of the time they spend looking at screens, as well as the perceived negative effects associated with social media usage, and wanting a digital detox as a result. This trend has continued.”

The report added that majority of the social media users across the world are aged between 16 to 24 years old, and that 72% said they used social media while they were watching television. “The importance of messaging apps to this demographic is a key reason behind this, as is the centrality of smartphones to their digital lives,” the report said.

“But the effects aren’t down to age alone. Even among 16-24s, certain markets primarily in Asia and Latin America stand out for their occupation with social media. Particularly notable are Argentina (4:17), the Philippines (4:16) and Colombia (4:12),” the report added. Note how all these three countries share a Latin or Hispanic, and Catholic, background.

To an extent, I suppose it is cultural. Filipinos are sociable people. We crave the need to keep in touch, to be part of the conversation, to be updated on what is happening with others, to be always in the know, and to have a sense of belonging and community. We also have extended families, and the penchant for big gatherings, reunions, and other social interactions.

But all this seems to be transitioning or migrating to an electronic platform rather than a physical one. And by keeping in touch “electronically” through social media, we have moved away from physically seeing people and interacting with them directly. The desire or longing for kinship in a physical way is actually diminished by the almost constant and instantaneous interaction online.

I have no data, nor studies, nor research to back this assertion. Perhaps this is simply a misimpression, on my part. But I do get the sense that social media, and electronic interactions may have more detrimental than beneficial effect on us socially, in the long run. We are now in the era of multitasking — using social media while doing something else — and divided attention. Do we not see these as chipping away at our humanity, bit by bit?

We have people with one eye on work and another on FB; watching TV while doing social media; having a meal with family while messaging friends electronically; crossing the street looking down on a mobile screen and ears plugged with earphones; riding a motorcycle with one hand as another hand fiddles with a mobile device to look for the next fare; and driving a car with one hand on the wheel and another on a smartphone looking for directions.

This is the kind of world we live in today — where presence and attention are not so equally divided between the physical on the left and the electronic on the right. We have already gone past the mid-point, I believe. And, it seems, it can move only to the right over time.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com