Rice QR exit, national ID touted to fight inflation
SENATOR Sherwin T. Gatchalian said the most pressing interventions to address inflation involve the removal of the quantitative restrictions (QR) regime on rice, as well as a national ID system, which will make it easier for poor citizens to avail of food and fare discounts.
“Right now, the immediate need is the removal of quantitative restrictions on rice. Another measure is the approval of the National ID system to identify who among the poor needing the discounts (on rice and on transport fares),” he told reporters after Monday’s Senate hearing on inflation.
Mr. Gatchalian has raised concerns over rising food prices after inflation hit 4% in January, following a 4.5% price increase in food and non-alcoholic beverages.
At the hearing, Claire Dennis S. Mapa, Dean of the University of the Philippines School of Statistics (UPSS), pointed out that the poorest Filipino families spent more on food, especially rice, citing data from the Philippine Statistics Authority (PSA) on the inflation in the price of goods on which the poorest segments of the population depend.
National Economic and Development Authority (NEDA) undersecretary for policy and planning Rosemarie G. Edillon concurred that removing the quantitative restriction regime on rice will reduce the retail price of the commodity.
“If we have a more liberalized trade regime with respect to rice — meaning we’re talking about the tariffication of rice — then our idea there is you take out the policy uncertainty in the rice market,” she said.
“And with the tariffication, the revenues can be plowed back to the sector in terms of very intensive agricultural development programs. And this will actually stabilize not just the rice but also the other food products in the market,” she added.
NEDA Director-General Ernesto M. Pernia also pushed for the lifting of the QR on rice to increase the purchasing power of households, especially the poor.
He added that the increased price of rice was also related to the “disorganization” at the National Food Authority (NFA), which is failing to maintain its mandated buffer stock levels.
“The NFA seems to have been in disarray and we need to do something about the way NFA handles this buffer system to make sure that there’s no spike in the price of rice,” he said.
Meanwhile, Mr. Mapa added that the safety nets for the poor in the form of cash transfers provided by the Tax Reform for Acceleration and Inclusion (TRAIN) law are insufficient to offset increased prices, based on his estimates.
Mr. Gatchalian said the government could look into “non-revenue measures” to address the insufficiency of the cash transfers, including the proposed national ID system in order to better identify those entitled to the mitigating measures under the TRAIN law.
“The national ID system is also very important because this is where we are going to be releasing the targeted subsidies such as the discounts on transportation fares and rice,” he said.
Finance Undersecretary Karl Kendrick T. Chua said the DoF has yet to implement the TRAIN law’s social benefit programs, such as the 10% discount on fares and NFA rice, pending the passage of the national ID system.
Aside from conditional cash transfers and the discounts, the TRAIN law also entitles beneficiaries to free skills training from the Technical Skills and Development Authority (TESDA). — Camille A. Aguinaldo
Excise tax collections rise 81.7% in Jan. after TRAIN
By Melissa Luz T. Lopez
Senior Reporter
EXCISE TAX collections rose nearly 82% year on year in January as the new tax law kicked in, according to data from the Bureau of Internal Revenue (BIR).
In a statement, the Department of Finance (DoF) said collections from cigarette, cars and sweetened drinks hit P22.078 billion last month, up 81.7% from January 2017, while also exceeding the P20.501-billion target by 7.7%.
The statement was quoting BIR Commissioner Caesar R. Dulay, who reported the collections to the DoF’s executive committee.
Signed by President Rodrigo R. Duterte as Republic Act No. 10963, the Tax Reform for Acceleration and Inclusion (TRAIN) Act removed some exemptions to value-added tax as it increased tax rates for fuel, cars, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for shares not traded on the stock exchange, and stock transactions.
It also introduced a new tax covering cosmetic procedures.
The BIR said tobacco excise collections doubled to P12.139 billion in January, while also exceeding the P7.944-billion target for the category.
Meanwhile, higher duties on automobiles soared to P443.34 million, more than double the P208.01 million collected in January last year and 29.4% higher than the P342.561 million goal for the month.
Taxes generated by sugar-sweetened drinks brought in P2.5 billion in revenue.
In particular, Coca-Cola FEMSA Philippines, Inc. paid P1.186 billion in taxes, followed by Pepsi Cola Philippines, Inc. with P666 million, ARC Refreshments Corp. with P293.015 million, Nestlé Philippines, Inc. with P143.5 million; and Inter Beverages Philippines with P112 million.
Other big firms which remitted the new taxes are Asia Brewery, Inc. with P18 million; Liwayway Marketing, P16.049 million; SMB Inc., P10.726 million; and Zesto Corp., P7 million.
TRAIN imposed an excise rate of P6 per liter on drinks containing caloric or non-caloric sweetener and P12 per liter on drinks containing high-fructose corn syrup. The higher prices seek to discourage Filipinos from consuming soft drinks and similar unhealthy beverages.
Instant coffee mixes and milk are exempted from these taxes.
Early this month, Mr. Dulay said preliminary data showed that BIR collections overall rose 15% year on year.
Higher taxes from new items are expected to more than offset lower rates for personal income taxes for those earning below P2 million, from which the DoF expects a P10-billion monthly reduction in collections.
The BIR is targeting to collect P2.039 trillion in taxes in 2018, which is 11.48% more than the P1.829 trillion goal it initially set early last year. If realized, this would also be 14.6% higher than the P1.779 trillion collected in 2017.
MPIC won’t propose projects pending toll dispute resolution
THE Metro Pacific group said it will hold off on submitting unsolicited proposals for expressway projects pending resolution of its road toll dispute with the government.
Metro Pacific Tollways Corp. Rodrigo E. Franco said the group will defer proposals until there is “some clarity” on its requests to raise road tolls.
“If the situation continues to not be resolved, then obviously we will be forced to slow down on the projects that have not yet started. That is why we are hoping to have some clarity on the toll rate,” Mr. Franco told reporters on the sidelines of the ceremonial drive-through of the SCTEx Mabiga interchange and the opening of the NLEx Sta. Ines-Magalang Interchange.
Mr. Franco said running losses due to the freeze in tolls are P6 billion for the North Luzon Expressway (NLEx) and P1.5 billion for the Manila-Cavite Expressway (Cavitex).
Unsolicited projects submitted by the Metro Pacific group include the Cavite-Tagaytay-Batangas Expressway (CTBEx) and the NLEx-Cavitex port expressway.
Toll Regulatory Board (TRB) consultant Alberto H. Suansing told reporters that the petition for the NLEx fare increase is with the Department of Finance (DoF) and the National Economic and Development Authority (NEDA).
“During the last administration, (the toll road operators) were not granted any increase, so they are seeking them right now. What they want was 2012-2014 to be added. That’s being deliberated by the board. Both NEDA and Finance are wary about that,” Mr. Suansing told reporters on the sidelines of the event.
He added that the government is studying a gradual increase in fees.
“What we are looking at is the gradual increase. Staggered… so the effect will be cushioned. Of course, what we are looking at is the motoring public, but we don’t want to make the government look as if we don’t honor contracts. So we have to consider both interests.”
Metro Pacific Investments Corp. (MPIC) filed in April 2016, through NLEX Corp., a notice of arbitration for around P3 billion in compensation for toll adjustments due to take effect on NLEx in both January 2013 and January 2015.
MPIC also filed through Cavite Infrastructure Corp. (CIC) in April 2016 a notice of arbitration and statement of claim to the government to obtain P877 million in compensation for what it says is inaction by the government over toll hike petitions due since 2012. Adjustments have been due since Jan. 1, 2012; Jan. 1, 2014; and Jan. 1, 2015.
In June, Romulo S. Quimbo, Jr., senior vice-president for Legal, Regulatory Affairs and Government Relations of Manila North Tollways Corp., said MPIC is open to a possible compromise with the government to resolve the dispute over toll fee increases covering Cavitex and the NLEx.
CIC and the Philippine Reclamation Authority (PRA) in September proposed a toll fee increase for the R-1 Expressway and R-1 Expressway Extension of Cavitex.
The TRB in November approved a provisional fare increase of P0.25 for NLEx, or P18 for 72 kilometers, subject to value-added tax (VAT), in response to a petition by MPTC to implement a toll increase of P0.27. The increase is intended to recover the P2.7 billion it invested in expanding the expressway.
MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo
Half of social enterprises focused on agriculture — PwC
PWC Philippines said about half of domestic social enterprises are focused on developing the agricultural sector, specifically by improving managerial practices of farmers and growers.
Lawyer Alexander B. Cabrera, PwC chairman and senior partner, estimated the number of social enterprises at 30,000, with agriculture-based enterprises “easily” accounting for half.
“They are seeking to mobilize farmer groups, which help individual farmers become more productive,” Mr. Cabrera told reporters on the sidelines of PwC’s launch of its 2018 Development Social Enterprise Awards (DSEA).
Mr. Cabrera said the PwC will consider undertaking a study that will assess the landscape of social enterprises. The study may also include an analysis of the impact of tax reform.
On Monday, PwC, its Philippine member firm Isla Lipana & Co. and the Benita and Catalino Yap Foundation launched the third edition of the DSEA awards to recognize organizations committed to social objectives.
Deadline for applications is May 4 with awarding scheduled for June.
Qualified nominees should have been in operation for at least two years, be able to lay out well-defined social objectives and have total assets not exceeding P50 million.
At stake are a cash prize of P350,000, free legal consultancy services for two years, and assistance in tapping banks for loans. Finalists and the grand winner will receive training grants from PwC and BCYF. — Janina C. Lim
DTI targets $10M in new deals from Japan food trade fair
THE trade department has set a target of $10 million worth of new deals to be generated by the Philippines’ participation next month in Japan’s FOODEX trade fair, also known as the 43rd International Food and Beverage Exhibition.
In a statement, the Department of Trade and Industry (DTI) Center for International Trade Expositions and Missions said Philippine brands will be exhibitors at the Japan event, the largest food fair in the Asia-Pacific region.
The country’s top exporters of tropical fruit, beverages and other processed food are expected to participate in the four-day event which will be held in Chiba, Japan starting March 6.
“Japanese consumers are no stranger to us. We know that they have a penchant for our tropical fruits and that is what we are looking to showcase as we return to FOODEX,” said Nora K. Terrado, DTI undersecretary for Trade and Investments Promotion and CITEM officer-in-charge in the statement.
Japan is the country’s largest export market for fresh food. It is also the second-largest destination for processed food, next to the United States. Citing initial reports from the Philippine Statistics Authority (PSA), the DTI said Japan is among the top export destinations of the Philippines with a 16.20% share of total merchandise exports in 2017.
The two countries have a free trade agreement, the Japan-Philippines Economic Partnership Agreement (JPEPA).
“We will also feature other tropical food and ingredients to widen the line of Philippine products shipped to Japan and promote the country as a premier sourcing destination,” added Ms. Terrado.
FOODEX last year attracted over 3,000 exhibitors, as well as more than 82,000 buyers from the food manufacturing, service, distribution, and trading sectors across the global food industry. — Janina C. Lim
Revenue Regulations No. 08-2018 for individual taxpayers
The passage of Package 1 of the Tax Reform for Acceleration and Inclusion (TRAIN) law is considered by many a welcome change, particularly to individual taxpayers. After almost two decades, individual income tax rates were finally adjusted. Although the adjustment is said to be the most popular provision in the TRAIN law, there are other rules which an individual taxpayer must take note of.
Implementing rules, computations, and examples are shown in the recent Revenue Regulations (RR) No. 08-2018 in relation to the taxation of individuals. What are the salient points in these regulations that an individual taxpayer should be cautious about?
1. Employees who are NOT qualified for substituted filing
When an employee is qualified for substituted filing, it means that the employee is no longer required to file a separate income tax return. On the contrary, if not qualified for substituted filing, a separate income tax return filing has to be made.
According to RR 08-2018, all individuals deriving compensation income, regardless of amount, from two or more concurrent or successive employers at any time during the taxable year, are not qualified for substituted filing. Thus, they are still required to file a return.
The above rule could mean that even when an employee earns a compensation income not exceeding P250,000 in a taxable year, but such income came from two or more employers in the same taxable year, he should still file his separate income tax return. A question, however, may arise, on whether this is consistent with the intended simplification of tax procedures for those earning less income.
2. P3,000,000 threshold — a number to remember
If you are a self-employed individual, you should always remember the P3,000,000 threshold. This threshold pertains to the self-employed individual’s total sales/gross receipts within a taxable year.
If the total sales/gross receipts do not exceed the threshold, the following are the consequences:
* There is an option to use the 8% income tax rate in lieu of graduated income tax rates and percentage tax. The 8% income tax rate is imposed on the amount exceeding P250,000.
RR No. 08-2018 provides that the intention to opt for the 8% income tax rate must be expressed by the taxpayer in the 1st quarter income tax return or the initial quarter return of the taxable year when the taxpayer commenced business. Such election shall be irrevocable; and thus, the option chosen can no longer be changed. If the choice is not properly made, the individual loses the option to use the 8% tax rate; and thus, they will be subjected to graduated income tax rates.
* The individual, when filing the annual income tax return, is no longer required to attach financial statements to the tax return.
* If an individual does not exceed the threshold, certain types of individual taxpayers are still unqualified to choose the 8% income tax rate. First, this option is not available to VAT-registered taxpayers and taxpayers subject to Other Percentage Taxes. Second, this option does not apply to partners of General Professional Partnerships (GPPs) with respect to their distributive shares. This point is extensively discussed and illustrated in RR No. 08-2018.
* In case the individual avails of the 8% income tax option, but subsequently, earns gross sales/receipts exceeding P3,000,000 during the taxable year, the individual shall automatically be subject to the graduated rates. Any quarterly payments under the 8% income tax rate option may be allowed as tax credit from income tax due.
3. No crossover of the P250,000 tax exempt portion for a mixed income earner availing of the 8% income tax rate.
In the new income tax table, the first P250,000 is not subject to income tax. But what if an individual taxpayer, opting to avail of the 8% income tax rate, both has compensation income and business income? For example, the compensation income is only P200,000 in a taxable year; while his business income is P100,000 in the said year. In this case, to determine the taxable compensation income, the amount of P250,000 tax-exempt will be used; there will be no taxable compensation income, as it is fully covered by the tax-exempt amount. However, the question is whether the “unutilized” P50,000 (P250,000 tax exempt less P200,000 compensation income) can be deducted against the business income.
To answer the concern above, the illustration in RR No. 08-2018 shows that the “unutilized” exempt income is not allowed as a deduction against the business income. The Bureau of Internal Revenue (BIR) explained that the P250,000 tax exempt income is not applicable to the business income of a mixed income earner availing of the 8% income tax rate option, since it is already incorporated in the first tier of the graduated income tax rates applicable to compensation income.
4. Itemized Deduction and Optional Standard Deduction (OSD) is not an option for individuals availing of 8% income tax rate
The computation of 8% income tax is based on gross sales/receipts without deductions, except for sales returns/allowances and sales discounts, subject to certain criteria. Hence, itemized deductions or OSD are not available to individuals availing of the 8% income tax rate.
The lower personal income tax rates offered by the TRAIN law are indeed a pleasant reform for individual taxpayers. As popular as the said provision is, an individual taxpayer should not forget that there are other rules to take note of in order to know their rights, their options, and the related consequences.
Flourence Kathrine S. Enriquez is a manager of the Tax Advisory and Compliance of P&A Grant Thornton.
Philippine Corporate Governance Regimes
THERE is a public perception that the system of corporate governance (CG) in the private sector is of “superior standard” when compared with public CG system; or that at least, there is greater adherence and compliance with CG principles and best-practices in the private sector than in the public corporate sector. In another way at looking at it, our society generally considers public corporate sector to be more prone to corruption than that of the private corporate sector.
This article compares the prevailing CG system for government-owned-or-controlled corporations (GOCCS) with those for publicly-held companies (PHCs) in the private sector, in an attempt to determine the veracity of such perceptions, and in conclusion offer the explanation for such divergence.
The article is written under the presumption that most of the readers are fully aware of the CG principles and best practices prevailing for PHCs which are currently divided into two groups: (a) publicly-listed companies (PLCs), which are governed by the Code of CG for PLCs; and public companies, which are non-listed companies having assets in excess of P50 million, and having two-hundred (200) or more stockholders each holding at least one-hundred (100) shares of a class of its securities, which are still governed by the Revised Code of CG.
Consequently, the article will primarily articulate on the existing CG structure pertaining to GOCCs, and in the process compare them with their counter-part principles and best practices pertaining to PHCs.
THE GOCC GOVERNANCE ACT OF 2011
In July 2011, Congress passed into law Republic Act No. (R.A.) 10149, formally denominated as the “GOCC Governance Act of 2011.”
Apart from the appropriation act, it was the first substantial legislation signed into law by then President Benigno S. Aquino III, which sought to “promote financial viability and fiscal discipline in [the GOCC Sector] and to strengthen the role of the State in its governance and management to make [GOCCs] more responsive to the needs of public interest.”
The GOCC Governance Act unified into the so-called “GOCC Sector” all government corporations, whether chartered (i.e., created by direct act of Congress) and non-chartered (i.e., those organized under the Corporation Code of the Philippines), whether stock or non-stock, and whether performing commercial or proprietary functions, or those having in addition regulatory powers.
The policies sought to be pursued under RA 10149 are based on the State’s recognition of “the potential of [GOCCs] as significant tools for economic development,” requiring “the State to actively exercise its ownership rights in GOCCs and to promote growth by ensuring that [their] operations are consistent with national development policies and programs.” Towards such end, the Act mandates that the State shall ensure pursuit and realization of the following public policies:
(a) Judicious Use of the Corporate Medium: The corporate form of organization through which government carries out activities is utilized judiciously.
(b) Efficient and Monitored Use of Resources: The operations of GOCCs are rationalized and monitored centrally in order that government assets and resources are used efficiently, and that government exposure to all forms of liabilities including subsidies is warranted and incurred through prudent means.
(c) Transparency, Responsibility and Accountability: The governance of GOCCs is carried out in a transparent, responsible and accountable manner, and with the utmost degree of professionalism and effectiveness.
(d) Proper Reporting and Evaluation of Operations and Management: A reporting and evaluation system which will require the periodic disclosure and examination of the operations and management of GOCCs, their assets and finances, revenues and expenditures, is enforced.
(e) Competent Governing Boards: The members of the Governing Board of every GOCC are competent to carry out its functions, fully accountable to the State as its fiduciary, and act in the best interest of the State;
(f) Reasonable, Justifiable and Appropriate Remuneration Scheme: Reasonable, justifiable and appropriate remuneration schemes are adopted for the directors/ trustees, officers and employees of GOCCs and their subsidiaries to prevent or deter the granting of unconscionable and excessive remuneration packages.
(g) Competitive Neutrality: There is a clear separation between the regulatory and proprietary activities of GOCCs, in order to achieve a level playing field with corporations in the private sector performing similar commercial activities for the public.
The GOCC Governance Act does not contain a provision for the issuance of implementing rules, for as in the case of important legislations in the past, such as the Corporation Code, the provisions of RA 10149 are self-executory. Indeed, the Act sees its policies, principles and rules maturing and growing as the Governance Commission for GOCCs (GCG) manages the GOCC Sector, through its memorandum circulars and rulings.
More importantly, the so-called “implementing rules” of the Act shall find themselves expressed in manuals and codes that the GCG is mandated to promulgate, sometimes on its own power, and others with the approval of the President of the Philippines.
THE GOVERNANCE COMMISSION FOR GOCCS (GCG)
As the counter-part of the Securities and Exchange Commission (SEC) for PHCs in the private sector, the GOCC Governance Act constituted the GCG as the “central advisory, monitoring, and oversight body with authority to formulate, implement and coordinate policies” for the GOCC Sector.
Among other things, the GCG is empowered to classify, evaluate the performance, and determine the relevance, of GOCCs, to ascertain whether they should be reorganized, merged, streamlined, abolished or privatized, in consultation with the Department or agency to which they are attached.
The Act mandates that “In addition to the qualifications required under the individual charters of the GOCCs and in the bylaws of GOCCs without original charters, the GCG shall identify necessary skills and qualifications required for Appointive Directors and recommend to the President a shortlist of suitable and qualified candidates for Appointive Directors.”
To maintain the quality of management of the GOCCs, the GCG is mandated to prescribe, pass upon and review the qualifications and disqualifications of individuals appointed as officers, directors or elected CEO of GOCCs, and disqualify those found unfit. In determining whether an individual is fit and proper to hold the position of an officer, director or CEO of the GOCC, due regard shall be given to one’s integrity, experience, education, training and competence.
ORGANIC DOCUMENTS IN THE GOCC SECTOR
The GCG undertook the formal adoption and promulgation of the organic documents mandated under the GOCC Governance Act, thus:
a. Ownership and Operations Manual for Governing the GOCC Sector
The GOCC Ownership/Operations Manual provides for the objectives of State ownership in GOCCs, and provides for the formal structure of the basic relationship between the State and its various agencies with the GOCCs. It is deemed to be the “Magna Carta in the GOCC Sector”, since it—
- Provides for the Governing Principles and Objectives of the State as an “Active Owner” of the GOCCs;
- Defines the Role and Relationship of the State, its agencies and instrumentalities, vis-à-vis the GOCCs as “significant tools for national development”;
- Provides for the roles and responsibilities of GOCCs and the Primacy of the Boards of Directors/Trustees in the governance of the GOCCs;
- Provides Guidelines for the Monitoring and Evaluation of the GOCCs and their Governing Boards and CEOs;
- Provides for the Policy Framework for Tasking GOCCs to Undertake Non-Commercial Activities.
GOCC Governing Boards are encouraged to look at the GOCC Ownership/Operations Manual as a “Bill of Rights and Responsibilities” as they pursue the proper role and responsibilities of the GOCCs in which they serve.
For example, against an overbearing Supervising Agency, the Governing Board of a GOCC may point to the provision of the Manual that explicitly calls for respect of the legal structure and operational autonomy of each GOCC. While supervising agencies of the National Government are mandated to ensure that the corporate plans and programs of GOCCs under their supervision are congruent with the sectoral objectives and priorities of their respective departments, the Manual provides that such Supervising Agencies shall not be involved in the day-to-day management of GOCCs.
Another example would cover GOCCs like SSS and GSIS which really do not hold government funds, but actually have custody and trust obligations of the contributions of employees and pensioners, Such GOCCs may invoke Article 6 of the GOCC Ownership/ Operations Manual to parry the demands of an Administration on off-beat “pet projects”, which clarifies that the role of the State in such GOCCs “is not that of an active owner or investor, but a guardian to promote the best interests of the members of the public whose contributions are to be prudently invested for their benefit, and also as a guarantor for the contingent liabilities.”
b. Code of CG for GOCCs
The GOCC Code of CG contains the mandated governance principles and best-practices applicable to GOCCs, and adopted from the OECD Governance Guidelines for State-Owned Enterprises, as well as from the SEC’s Code of CG. The Code is intended to instill within the GOCC Boards and Management the highest sense of responsibility, transparency and accountability, and covers the following areas:
- Role and Responsibilities of the Governing Boards, and the individual Directors as “fiduciaries of the State”;
- Disclosure and transparency requirements;
- Code of Ethics of Directors and Officers in the GOCC Sector;
- Creation of Board Committees and similar oversight bodies;
- Providing for an Integrated Corporate Reporting System (ICRS);
- CSR Statement and the Role of Stakeholders.
In addition, the GOCC Code of CG contains a provision on the “Obligations of the GOCC to the Members of the Governing Board,” such as the provision of staff support. Another key feature is allowing GOCCs to obtain Directors and Officers Liability Insurance (DOLI) coverage for members of the Board and Officers. The DOLI is intended to insure against contingent claims and liabilities that may arise from the performance of their functions, except in cases when there has been a breach of a fiduciary duty or a commission of fraud. This is of particular importance when viewed in the context of RA 10149 having imposed a lot of responsibilities on the Board and required them to act with extraordinary diligence.
(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)
Cesar L. Villanueva is the Vice Chair of the CG Committee of the Management Association of the Philippines (MAP), the former Chair of the Governance Commission for GOCCs and the Founding Partner of the Villanueva Gabionza & Dy Law Offices.
Considering the role of voice and choice in Charter change
It seems the Philippines has reached another juncture in its slow march towards political development, with the most recent debate on Charter change (including a proposed shift in the form of government) as the most prominent hurdle. Political junctures can be reached gradually as part of a political cycle, or a sudden insistent questioning of dominant norms. Whatever the case may be, the change is most compelling when the demand for social and political change is authentic, and not a fabricated version of public opinion.
What seems to be missing from the current debate unfolding in the different halls of power: the House, the Senate, and the newly created Charter change Consultative Committee is a strong multi-sectoral voice clamoring for this debate to prosper.
Perhaps what is underappreciated in the current debate on Charter change is the need to separate an authentic demand for political change from one that is cloaked in consultations, road shows, and other consensus seeking devices. The lack of a definitive demand via public opinion is a telling sign of unpreparedness for what political change is to come.
What constitutes a definitive demand? When the situation requires it. I return to an article I wrote for Blueboard in 2014 (and prior to this, another article written a decade before, in 2004, on electoral reform and Charter change issues). This previous article, written for a previous administration on a previous Charter change try raised Schimitter’s criteria for a “constitutional moment.” It is one that emerges when the political context changes drastically, either by becoming a State or having no prior experience of constitutional governance, or when there are changed boundaries in a State’s territory, or when role that political authority has played changes drastically, or if a new ethnic minority has joined the polity or a new part of the population has been enfranchised.
In other words, the State should have changed so much that it is clear to everyone that the Charter must be changed as it no longer represents who we are as a people.
Granted, there are characteristics of the Philippine State that must be viewed with some consideration such as the Local government code of 1991 or RA 7160 that provides for the role and powers of local government units and has yet to be fully implemented. Migration, of course, has changed the course of the Philippine State and it has accommodated our Filipinos abroad with the Migrants Workers Act of 1995 (or RA 8042 and the subsequent RA 10022) and RA 9189 or the Overseas Absentee Voting Act of 2003. Mindanao’s changing political landscape is currently being considered through the BBL or the Bangsamoro Basic law. Population growth and the debates on the passage and implementation of the Responsible Parenthood and Reproductive Health Act of 2012 or RA 10354 and even the recently passed Train law: these are all indicators that the State continues to address changes in the political, social, and economic landscape. By looking back at the passage of these laws, one sees not just governmental actors but thick networks of civil society organizations: NGOs, POs, internationally based and local groups and other special interest groups alongside concerned citizens that actively pushed for (or against) each of these landmark laws. There was a multiplicity of voices that actively challenged or supported State actors and in doing so produced policy that can by all means be considered public.
I also argue further that aside from ensuring that there is a definitive need for Charter change beyond that which can be responded to by current mechanisms such as the enactment and further implementation of laws, a number of changes must also be made to move beyond the current framework of Philippine Politics that is still hinged on personal (and familial) ties weak representation and limited political participation:
(1) Representation — we must reckon the role that political parties play in political organization. Without clarifying how we want to be organized and represented means that we allow other traditional actors (such as political dynasties) to continue playing an all too central role in the way politics in the Philippines is run and won.
(2) Participation — electoral reform must continue because the context in which we elect our leaders also evolves. This includes ensuring the active participation of groups such as women, the youth, ethnic minorities, Filipinos overseas, persons with disabilities, and the poor in each electoral contest. This can be done via developing new electoral technologies or simply ensuring that electoral violence and intimidation, which seriously should have no place in modern electoral contests, do not limit Filipinos right to vote.
Frankly, as Philippine-based political scientists, it becomes slightly frustrating to keep pointing out the same things. We joke among ourselves that it makes our job easier and our income steadier but at the same time, it leaves us with the feeling that we really aren’t doing our jobs very well. A political event such as the current debate on Charter change and the shift in form of government forces us to reevaluate our political realities and reminds us once again to do our jobs well. It is a challenge not just for academe based citizens but for all members of our political community: it is OUR job and we must ensure that political changes undertaken at important junctures are not made by just those who think and make us believe that they are doing theirs.
I end with a shameless plug: ATENEO EAGLEWATCH, a political and economic briefing will be held on March 7, 10 a.m.-12 noon at the Escaler Hall in the Loyola Height Campus. Speakers are Ciel Habito, Ph.D. on “the Philippine Economic and Performance Outlook” and Melay Abao, Ph.D candidate, on “the Philippine Political Outlook: What to Expect Between Now and May 2019.” For inquiries, please call the Department of Economics at 426-6001 (local 5222/21) or the Department of Political Science (local 5250/5253).
Maria Elissa J. Lao is an Assistant Professor of Political Science at the Ateneo de Manila University where she is currently the Director of the Institute of Philippine Culture.
The unfinished revolution
So here we are, 32 years later after those four fateful days in February 1986 that began as a revolt and then morphed into a peaceful People Power Revolution. For four days, especially the last three, the Filipino came together as one nation in heart and mind, from EDSA to other parts of the archipelago, to free themselves from the yoke of authoritarian rule that started with the common good in mind but ended in self-service 14 years later. But after 32 years, we find ourselves still mired in traditional politics and divided all the more by injustice, exclusion, impunity, poverty and insurgency.
Last Thursday, the Camera Club of the Philippines headed by Sonny Camarillo invited former president Fidel V. Ramos, Pastor “Boy” Saycon, and I to share our thoughts about the Revolution. We focused on the elusiveness of national unity. We reminisced that in February 1986, for one brief shining moment in our history, Filipinos from all walks of life set aside their walls of division and came together for a common purpose to open the doors to real change, “tunay na pagbabago.” Unfortunately, we quickly lost sight of our goal when traditional politics reemerged from the shadows to dominate our lives to this day.
EDSA was about a heaven-sent golden opportunity to change our “ugali” — our attitudes and behavior such as apathy and gross negligence — driven by a deeply embedded culture of self-interest and entitlement that infamously tolerates and accommodates greed, crime, and corruption. We said it was about unity of purpose for self-reform to forge ahead and build our nation for future generations. We needed to acknowledge that we were the problem and that the solution could only come from within our hearts and minds. That, to us, was the real revolution — transforming ourselves into better Filipinos for a better Philippines.
Unfortunately, we’re still divided.
Instead of taking advantage of the window we opened to usher in real change, we squandered it. We didn’t let go of our “ugali,” which was why martial law was allegedly imposed in the first place, and the same reason why it failed. Traditional politics never left, we didn’t stop it and it has divided us all the more. It has a family business mind-set where gaining a government position is the sure fire way of enriching oneself and staying in power. A study by the Ateneo School of Government shows that the top 15 poorest provinces in the country are governed by political dynasties.
The 1987 Constitution mandated an enabling law to define and ban political dynasties. Thirty years later, the country remains in the grip of “fat” political dynasties that occupy multiple positions of power all at once in the government — national and local, elected and appointed. The Ateneo study also revealed that provinces exhibiting lower levels of poverty arise from “thin” dynasties that lord it over their constituencies one after the other following a systematic plan of succession. The reason we still don’t have an enabling law is because Congress is ruled by dynasties who obviously refuse to give up their power.
In 1972, [resident Ferdinand Marcos declared martial law in order to create a new society, free from the grip of the oligarchs that controlled the economy and the lives of the Filipino people. Unfortunately, absolute power created another oligarchy called the “cronies” and brutally suppressed any opposition, including perceived competition for power from within that led to JPE’s revolt in February ’86. The trouble was that most of us had the wrong notion that if Marcos was deposed, our problems would be over. We missed the truth and the big picture — that the Marcos regime symbolized our society’s brokenness; that we were the problem we had to fix; not “pasismo,” “comunismo” or “feudalismo,” but “TAYO MISMO.”
How can we unite when our “ugali” reflects a moral crisis? Do we ever admit our mistakes and make amends? Do we internalize, learn bitter lessons, and voluntarily reform like mature adults? Do we first weigh if our actions will harm or benefit the greater good? Do we identify ourselves as Filipinos before we say what our regional, religious or tribal links are? Do we ever think and act as a united cohesive society working for the national interest? No to all that. We remain selfish, parochial, greedy, unethical, unjust — the very opposite of what it takes to be solid citizens for nation building.
We talk about our problems to death day in day out, but don’t do anything to address the root cause — our “ugali. We’re unable to reinvent ourselves into becoming better Filipinos for a better Philippines. We’re unable to form a Team Philippines that can be better than the others. It’s still the other way around and we’re consistently falling behind. That’s why there’s a lot of anger and violence. Now, we have a President whose heart is in the right place, but doesn’t have the critical mass to help him effect real change. That’s because we remain passive and a deadweight to the call for “Tunay na Pagbabago.”
We’re trapped by our “ugali.” We’re stuck to our corrupted ways that, for perspective, provided the basis and justification for martial law, only for the regime to fall into the same black hole it tried to stop in its early years. We have yet to break free and reinvent ourselves to create a new Filipino, 32 years after EDSA. We cannot hope to compete and survive in the 21st century, and beyond, if we don’t acknowledge that we are the problem and that the solution lies in our hands. We must mend our fences, make things right, close ranks and unite to build a strong nation for our children.
Our national reputation for unfinished business is notorious. We must bring closure to the many walls that divide us. We must finish our journey towards “pagkakaisa” and “pagbabago” that we started at EDSA in February 1986. That’s the vision and mission. Long live the Spirit of EDSA!
Rafael M. Alunan III served in the Cabinet of President Corazon C. Aquino as Secretary of Tourism, and in the Cabinet of President Fidel V. Ramos as Secretary of Interior and Local Government.
Do we buy what celebrities sell?
Companies sometimes employ celebrities to sell their products. This expensive marketing approach has often been used with little regard to its effectiveness in the purchasing decision, especially when the same celebrity is used for products ranging from noodle soup in sachets to condos and footwear.
Celebrities need not have any particular expertise on a product’s effectiveness. Sure, maybe a skin whitener endorsed by a fair-skinned actress still in her prime is able to convince the dark unknown to buy the product to somehow transform herself into the goddess holding the item in the billboard. If the product whitened her skin, it should do the same for everybody else, presuming of course that she used to be dark, before using the product, if she used it.
Celebrity marketing offers a straightforward proposition. It is the aspirations of the consumers that are being stoked — I too can have white skin and be fussed over by hunks in tank tops. Maybe, the hunk part also broadens the product appeal to more than one gender.
The most important quality a celebrity offers is her fame and instant recognizability. The brand then, maybe by image osmosis, acquires the same celebrity status, along with attributes like youth, vivacity, coolness, and chic that are deemed transferable to the brand.
The popularity of using celebrity endorsers is evident in how they dominate billboards in major thoroughfares. And, here’s where the problem lies. Can a celebrity really be credible as a product endorser (or user?) if she’s pushing 43 brands? Are we supposed to believe that she owns or uses (or at least has tried) all the products she is associated with, like gadgets, cosmetics, and funeral services? Does her virtual lifestyle in her digital world exist in real life?
What happens when a celebrity ceases to be well known due to lack of exposure in traditional media? Will a boxer-turned-politician still be sought as endorser when he starts losing and simultaneously eroding the brand appeal of being a champ? Is an inability to book a fight, except as an undercard, with more famous fighters publicly and noisily turning him down as a has-been still make him viable selling a cold tablet? Will it still knock out the cold and cough?
Scandals too can erode the celebrity’s pulling power. When the endorser is damaged with a brawl in a bar or some embarrassing video making the rounds, does the brand she is promoting suffer the same fate? The “integrity clause” of most endorsement contracts provide for a quick exit when certain unsavory attributes attach to the personality holding the burger — will you still buy her bun?
Another kind of endorser is the expert. He does not need to be recognizable, just that he wears the right costume. Is the one checking tartar deposit in your teeth as you come out of a mall a real dentist? The toothpaste commercial does not specify so it cannot be accused of misrepresentation. Does a commercial model in a white lab coat with an infrared instrument need to be even identified by his qualification?
Real experts can be endorsers too, even if not well known. These personalities are employed for products not intended for mass marketing like dental implants, nutritional supplement, or gym equipment. Still, real practitioners are loath to recommend products that may have harmful effects. Such endorsements are only viable for the specialist when he has a stake in the company promoting the product like skin care and surgical enhancements.
One area where celebrity endorsement has not seemed to work is politics. Celebrities singing and dancing with the candidate in a TV commercial do not ensure that a well-funded politician can win. The irony of celebrity marketing is clear — the endorser is seen not as a believer but someone out to make a buck.
With a hot celebrity currently in high-profile TV shows or still wearing her sash from an international beauty contest, the fees for endorsement can be astronomical. These are usually covered by a contract for one year. This time limit assures both sides of the return on their investment: the celebrity’s continuing fame and the product’s attachment to that status.
The more traditional approach in advertising has been to tell a story with generic actors following a script. They evoke emotions like love and longing attached to the product. Of course, hit commercials can transform the once unknown model into a celebrity who can then endorse other products… for a higher fee.
A. R. Samson is chair and CEO of Touch DDB.
Aquino, Sereno charged with graft over SALNs
FORMER PRESIDENT Benigno S.C. Aquino III and Chief Justice Maria Lourdes P.A. Sereno were charged with graft on Monday, Feb. 26, before the Ombudsman in connection with Ms. Sereno’s Statements of Assets, Liabilities, and Net Worth (SALNs) when she was being considered in 2012 for her current position.
Their accuser, suspended lawyer Eligio P. Mallari, cited as a basis for his complaint the House committee on justice’s Feb. 12 inquiry, according to news reports that Mr. Mallari also cited. The said inquiry focused, among other things, on the premise that Ms. Sereno’s incomplete SALNs voided her appointment as Chief Justice by Mr. Aquino on the watch of the Judicial and Bar Council (JBC).
Besides Mr. Aquino and Ms. Sereno, also charged with violation of Sec. 3(e) of Republic Act 3019 (the Anti-Graft and Corrupt Practices Act) were JBC executive director Annaliza Ty-Capacite and chief Richard Pascual of the JBC’s Office of Selection and Nomination.
Mr. Mallari argued that “respondents Capacite, Pascual, Sereno and Aquino III individually had caused undue injury to SC Justices Carpio, Velasco and Leonardo-De Castro and retired SC Justices Abad and Brion, all contenders for the Chief Justice post in 2012, by giving unwarranted benefits, advantage or preference to Sereno through manifest partiality, evident bad faith or gross inexcusable negligence….”
“By stating that Sereno had ‘substantially complied’ with the 10-year SALN requirement — which is not so — and not baring to the JBC en banc that she only submitted one (1) sworn and two (2) unsworn SALNs out of 10 and that she unduly asked for exemption from such requirement, as borne out by the facts, Capacite and Pascual violated the law (sec. 3(e), R.A. 3019),” the complaint said in part, adding:
“Even without conspiring with Capacite and Pascual, Aquino III had violated sec. 3(e), R.A. 3019 just by causing undue injury to Carpio, Velasco, Leonardo-De Castro, Abad and Brion and the Government not only for turning a blind eye on then-justice Sereno’s noncompliance with the JBC’s 10-year SALN requirement, but also for disregarding her dismal psychiatric examination result of 4 (5 is lowest and 1 highest).”
“Sereno’s conspiracy with Capacite and Pascual may be inferred from the facts. She also acted in bad faith when she sought exemption from the 10-year SALN requirement with the Executive Committee of the JBC though not entitled thereto — for not attempting to comply.”
Ms. Sereno’s spokespersons have earlier noted in a statement that, “The fact that the JBC shortlisted the Chief Justice means its members…found her documentary submissions complete and compliant with the rules.”
Apart from his complaint, Mr. Mallari just last week had asked the Office of the Solicitor-General to initiate “quo warranto proceedings” to determine the validity of Ms. Sereno’s appointment.
Interviewed by reporters on Monday, Mr. Aquino said: “Sila (JBC) ang nagsasabi sino ang nasa listahan. Sa dulo nun ang sinasabi nila ngayon kulang mga submission. Sila dapat sumagot nun, dahil kapag binigay sa akin ang listahan ibig sabihin qualified sila. So mahirap, mabibigay sa iyo itong listahan ng taong qualified, pagpili mo, nga pala hindi ’yan qualified. Ano ba talaga?” (They are the ones determining who’s on the list. Now they’re saying the submission [of SALNs] is incomplete. They should answer that, because once a list is given to me, it’s understood that the applicants are qualified. So it’s hard, they give you a list of the people who are qualified, and you choose, it turns out, someone who isn’t qualified. Which is which?) — Dane Angelo M. Enerio