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Unacceptable tax avoidance

ABOUT two months ago, the weather bureau, PAGASA, officially announced the start of the rainy season. Despite sufficient warnings and precautionary measures by the government, these tropical cyclones often bring widespread damage to the country’s infrastructure, disrupt electricity and communication services, destroy crops, and leave behind human casualties.
Mitigating typhoon risks and managing rehabilitation efforts are the government’s primary concerns during calamities. These initiatives not only cost the government precious time and effort, but also consume significant quantities of public funds. It is therefore important for the government to collect taxes in order to raise enough calamity funds for emergency situations.
In the words of the late Justice Isagani A. Cruz, “Taxes are what we pay for a civilized society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one’s hard-earned income to the taxing authorities, every person who is able to must contribute his share in the running of the government. The government, for its part, is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values. This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power.”
Nonetheless, majority of Filipino taxpayers see taxes as a burden. As a result, some taxpayers try to escape payment through tax evasion, while others use legal pathways to their own advantage by means of tax avoidance.
The academe, in various textbooks, has provided us with clear-cut distinctions between tax avoidance and tax evasion. In theory, tax avoidance is the legal means of reducing taxes. It is a tax-saving device within the bounds sanctioned by the law. On the other hand, tax evasion is outside of those lawful means and when availed of, it usually subjects the taxpayer to civil or criminal liability. Simply stated, tax avoidance is legitimate, while tax evasion is illegal.
Despite the legality of tax avoidance schemes, several countries have introduced a General Anti-Avoidance Rule (GAAR) to limit tax avoidance schemes and prevent the taxpayers from escaping taxation.
But what does a GAAR specifically prohibit? It prohibits aggressive tax avoidance by providing tax authorities with the power to deny the tax benefits from a transaction or arrangement that lacks commercial or economic substance and is deemed to have an illicit tax-related purpose.
Currently, Section 50 of the 1997 Tax Code is the closest our local laws have come to the GAAR adopted by foreign governments. Specifically, the provision empowers the Commissioner of Internal Revenue (CIR) with the authority “to distribute, apportion or allocate gross income or deductions between or among organization, trade or business, if he determined that it is necessary in order to prevent evasion of taxes or clearly to reflect the income of any organization, trade or business.” Note though that this provision is limited to those organizations, trades or businesses owned or controlled directly or indirectly by the same interests.
The Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) Bill proposes to expand Section 50 of the Tax Code and intends to augment the powers of the CIR. The draft bill aims to provide the CIR with the authority to:
• Impute income or deductions, if he deems it to be necessary to prevent evasion of taxes or to clearly reflect the income of any organization, trade or business;
• Disregard and consider “tax avoidance” transactions or arrangements as void for income tax purposes; and
• Adjust the taxable income of a person affected by a transaction or arrangement in a way that the CIR thinks appropriate to counteract a tax advantage obtained by the person from or under the arrangement.
The draft bill further enumerates the “tax avoidance” arrangements or transactions to include those which directly or indirectly: a) alter the incidence of any income tax; b) relieve a person from liability to pay income tax or from a potential or prospective liability to future income tax; or c) avoid, postpone, or reduce any liability to income tax, or any potential or prospective liability to future income tax.
Unacceptable tax avoidance exists in the aforesaid instances when such are motivated by obtaining a tax benefit or advantage with no commercial reality or economic effect, and the use of such would not have been the intention of the law. It is likewise worthy to note that the tax avoidance purpose or effect must not merely be incidental but is the primary purpose for entering the said transactions or arrangements.
Some may debate that the proposed GAAR seems to penalize what are known to be legal means of reducing taxes. It may also be argued that the proposed provision is prone to abuse as it gives the CIR extensive authority to punish taxpayers and impose additional taxes by merely contending that the transactions or arrangements entered into are considered “tax avoidance.”
Even so, the introduction of the GAAR will put the Philippines at par with neighbors like Singapore and Malaysia and may serve as a safeguard to thwart the incidence of unacceptable tax avoidance practices, especially for transactions which have illicit tax-related purposes.
With a GAAR scheme in place, it is prudent for our taxpayers to prepare sufficient proof (e.g., transfer pricing documentation, memoranda, among others) and justification to show that their transactions have commercial and economic substance and are not merely entered into for the purpose of avoiding the payment of taxes.
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.
 
Abigael Demdam is a Tax Manager at the Tax Services Department of Isla Lipana& Co., the Philippine member firm of the PwC network.
63 (2) 845-2728
abigael.demdam@ph.pwc.com

Palace declares holiday on Aug. 21

By Arjay L. Balinbin, Reporter
Malacañang issued Proclamation No. 556 on Wednesday, Aug. 15, declaring Eid’l Adha (Feast of Sacrifice) holiday on Aug. 21.
On the same day, the Ninoy Aquino Day, which is observed annually to commemorate the assassination of former Senator Benigno “Ninoy” Aquino, Jr., will also be celebrated.
“Proclamation No. 556, declaring Tuesday, 21 August 2018, a regular holiday throughout the country, in observance of Eid’l Adha (Feast of Sacrifice),” the Proclamation read.
It also noted that the Feast of Sacrifice “is one of the two greatest feasts of Islam.”
“The National Commission on Muslim Filipinos has recommended that 21 August 2018 be declared a national holiday, in observance of Eid’l Adha,” it added.
President Rodrigo R. Duterte and Executive Secretary Salvador C. Medialdea signed the document in Manila on Aug. 15.

Dancing the cha-cha to the beat of the waltz

FROM 1791 to 1992, or a period of 201 years, the US Constitution was amended only 27 times. That’s an average of one amendment for every eight years in the nation’s life. To date, the United States has been an independent democratic state for over 240 years. And yet, over these 24 decades, it has changed or revised its Constitution only 27 times.
The Philippines, on the other hand, first declared independence in 1898 or 120 years ago. But, realistically, it has been an “independent” democratic republic only since 1946 or in the last 72 years. And over this period, we have amended and revised — if not almost completely overhauled — our Constitution twice: in 1973, and in 1987. If we count the 1935 Constitution made during the Commonwealth period, then we would have had three constitutions in 83 years.
Of course, this is not to say that we have mistakenly tinkered with our charter — our most basic of the law of the land — once too often. On the other hand, perhaps we have been taking too much liberty in changing or revising the law — without the benefit of more comprehensive analysis and study. Or, maybe we have let partisan politics and self-interest get the better of us.
Charter change may be inevitable in a vibrant and dynamic democracy, over the course of a nation’s life. However, as we now go for another round of “Cha-cha,” maybe it’s time we dance it to the much slower beat of the Waltz or the Foxtrot. That is, if most of us can actually be convinced that another change is absolutely necessary.
Over lunch last Monday with former Finance Secretary Gary Teves and a few other friends, Gary brought up the possibility of making changes in “phases,” with primary focus on reviewing the limiting or restrictive economic provisions of the charter and revising them over time, through an approach or manner allowed by law. In short, study everything well first before making changes.
It is in this line that I now bring up the US Constitution, where amendments were made over a long period, but without necessarily overhauling the entire charter. Changes were made one amendment at a time. To date, 27 amendments have been ratified, but only 25 are still functioning. Two amendments, one on declaring prohibition in 1919 and another on lifting it in 1933, are no longer in effect.
Incidentally, the 27th Amendment, on setting parameters for congressional compensation, was said to have been first proposed in 1792, but did not achieve final ratification until 200 years after or in 1992. The 27th Amendment is the last and most recent change to the US Constitution to date. It prohibits any law that increases or decreases the salary of members of Congress from taking effect until the start of the next set of terms of office for Representatives.
Interestingly, if one goes over all the 27 amendments, it seems only one was related to Economics: the 16th Amendment ratified in 1913 regarding the collection of Federal Income Tax. The 16th Amendment of 1913 provided for the first-ever Federal income tax in the US as it stated that “Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
All other amendments were related more to the Bill of Rights; the rights of former slaves; the right to vote for women; and, government bureaucracy, among others. In fact, the two-term limit on the US President was ratified only in 1951, as the 22nd Amendment. This is precisely the reason why Franklin Roosevelt managed to serve three terms and not just two, from 1933 to 1945.
And, in making amendments, there are only two methods allowed: US Congress can pass a bill setting out a proposed amendment by a vote of two-thirds in each body; or, a constitutional convention can be convened by a vote of two-thirds of the state legislatures, which will propose one or more amendments. To date, however, only the first method has been used to introduce amendments.
But, in either case, constitutional amendments become effective only after being ratified by three-fourths of the states. An example of a proposed amendment that was voted down was the proposed “Equal Rights Amendment,” which intended to guarantee that, “Equality of rights under the law shall not be denied or abridged by the United States or by any state on account of sex.” Proposed in 1972, it was ratified by only 34 of the necessary 38 states. Short by four votes, the amendment was not ratified.
There is still much to learn, I believe, from how older and more mature democracies like the United States go about changing or amending their Constitution, and how we have gone about revising ours in the last three times since 1935. But, to me, some lessons are very clear: comprehensive analysis, testing, and exhausting all options, and widespread consultation are all musts.
In the news of late, 19 groups have reportedly expressed their support for some economic ministers in calling on Congress to carefully consider the financial and fiscal costs of changing the charter to change the form of government. “At this time when financial markets in developing countries are being roiled following the difficulties of Venezuela and Turkey, it is all the more important that all sectors are seen as solidly behind the call of our economic managers for fiscal prudence, more dialogues and a well-considered approach in the shift to federal form of government,” the groups said in a joint statement issued to the press.
The groups are concerned that federalism will result in a “fiscal imbalance” that “would have dire consequences on the economy, as well as the government’s push for infrastructure development, particularly the flagship ‘Build, Build, Build’ program.” Thus, they are pushing for “full, open, and dispassionate dialogues on this proposed shift in form of government, keeping in mind its long-term impacts on future generations of Filipinos.”
One cannot help but agree with the call, for the simple reason that the life of a state is more dependent on the vibrance of its economy than its politics. A proposed change in the form of government cannot be taken lightly, given its far-reaching implications, especially if the effort appears to imperil the nation’s finances if not its very survival.
 
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.
matort@yahoo.com

Turkey will put capital rules to the test

By Satyajit Das
TURKEY’S economic and political conniptions have driven a significant sell-off in European bank stocks. This meltdown may illuminate a deeper question about regulation: whether more capital makes banks or the financial system resistant to periodic crises.
Additional capital requirements were the primary regulatory response to the financial crisis of 2008. Global systemically important banks now must increase their total loss-absorbing capacity over time to at least 18% of risk-weighted assets and 6.75% of unweighted exposure.
While useful, these requirements don’t eliminate financial risks. They may even create new ones. Turkey — which is suffering from a collapsing currency, rising bond yields, and soaring debt loads — should offer an important test case.
First, bank failures are triggered by funding problems; typically, a run on the bank and an inability to cover deposit outflows. More capital can’t protect against this risk. Banks are also highly leveraged by design. Unless they’re willing to return to 19th-century standards of 50% equity, the effectiveness of capital requirements will depend on the magnitude of exposure and loss in question.
As Turkey’s problems mount, these measures could be put to the test. Institutions such as Banco Bilbao Vizcaya Argentaria SA, UniCredit SpA, and BNP Paribas SA all have substantial exposure to Turkey. BBVA’s exposure is more than 15% of total risk-weighted assets. If major losses occur, then it would materially affect the capital position of these banks, with unpredictable consequences.
A second concern is that banks’ resilience to losses will depend on the type of capital instruments they rely on. At least a third of minimum capital requirements can be met with what are known as hybrid-capital instruments, such as contingent capital bonds or subordinated debt. These instruments present significant risks of their own.
Contingent capital notes can’t be repaid without a regulator’s consent. In bankruptcy, investors are repaid only after depositors, senior bondholders, and holders of subordinated debt. Crucially, the notes convert to ordinary shares when the issuer’s capital falls below a specified level. Subordinated debt presents similar problems: Repayment of principal will rank behind depositors and senior bondholders, and the debt may be “bailed-in”; that is, the liability can be written down partially or fully where the issuer suffers losses. (In practice, regulators may hesitate to do this for fear of exacerbating financial pressure on the affected institution.)
Investors have purchased these instruments for yield, and issuers have frequently sold them as a substitute for deposits. But ordinary investors may not understand that these are deeply subordinated investments with uncertain income, complex conversion or bail-in provisions, and substantial capital risk. Facing losses, panicked sellers may cause a collapse in prices and accelerate an affected bank’s failure.
As Europe has recently learned, this can be politically perilous.
In November 2015, retail investors in four Italian banks lost their savings after subordinated debt was bailed in. The suicide of a pensioner who had lost 100,000 euros led to an angry backlash against the sale of these instruments to ordinary investors. The write-down of subordinated debt after Spain’s Banco Popular Espanol SA failed in 2017 was similarly divisive and is currently the subject of legal action. If bank investors are forced to take losses once again due to the Turkish crisis, governments should expect to face rising public anger.
And this suggests the biggest problem of all: These instruments don’t eliminate underlying risks from bad lending. They transfer them from banks to investors. If the strict terms of a contract are enforced, then the losses suffered will affect the ability of pension funds, insurance companies, and other asset managers to meet their liabilities. Losses suffered by investors may affect consumption and reduce savings, which in turn might necessitate government intervention to bail out the bank or investors directly, undermining the entire rationale of increasing capital levels to strengthen the financial system and prevent the need for public support.
The Turkish crisis may provide a useful real-world stress test of the complex new regime of regulations and additional capital. Recent experience suggests some skepticism is in order.
Bloomberg

‘Greening’ the younger generation

THE recent monsoon rains that we have experienced easily resulted in severe flooding across Metro Manila and its neighboring provinces. Classes were suspended, business operations were interrupted, and the traffic situation was aggravated. While this may be “normal” for us during rainy season, the recent flooding was different as it did not require heavy rains to flood the streets.
One cause of the recent floods is the proliferation of plastic waste that clogs the city’s drainage system. While government is trying to remedy this perennial problem, it seems that these programs are ineffective.
We have witnessed rapid environmental degradation in the past years. According to Chen & Chai (2010), some of the causes are overconsumption and overuse of natural resources due to increased worldwide consumer demand. As a result, climate change and environmental problems, environmental protection, and sustainable development have become relevant issues in business and consumerism. Today, businesses and consumers confront their biggest challenge: to protect and to preserve the earth’s resources and the environment. This challenge has made “greening” an important issue for managers, marketers, and consumers.
People engage in environmental behavior to satisfy their desire to solve environmental problems, to become role models, and to feel they are helping to preserve the environment. According to Ishaswini and Datta (2011), the rising number of consumers who prefer and are willing to engage in environmental or green consumption is creating opportunities for businesses that use “green” as a component of their value propositions.
According to McEachern and McClean (2002), green consumerism includes environment preservation, curtailment of pollution, responsible use of non-renewable resources, and the welfare and preservation of animal species. Shamdasani et al. (1993) define environment-friendly or green products as those that can be recycled and processed, and do not pollute the earth or depreciate natural resources. A few examples of green products are energy-efficient light bulbs and products made of recycled or biodegradable materials.
In a local study I conducted this year, I compared the green purchase intentions of generation X, born between 1961 and 1981, and generation Y, born between 1982 and 2004 (Strauss, 2000). This study contributes to the debate about which generation has higher regard for protecting the environment. Among the variables tested were attitude toward green consumption; the subjective norm or the regard for green consumption among the groups who are important to us such as family and friends; perceived behavioral control or the resources that enable us to consume green products such as buying power and availability of green products in stores; and intention to buy green products. My findings revealed that both generations have similar levels of attitude toward green consumption and intention to purchase green products.
Interestingly, generation X registered a higher subjective norm than generation Y did. This implies that generation X faces more pressure from friends and relatives to buy green products. The results run contrary to global studies that revealed that generation Y has a higher subjective norm. This difference could be attributed to the changing orientation of younger Filipinos, who experience a strong force to uphold uniqueness and individualism.
The practical implication of these findings would be for businesses to adopt strategies to persuade generation Y, now the dominant consumers in the market, to support green initiatives. A unique selling approach integrating individualism and green consumption might drive this group to become more involved in the green revolution.
Hopefully, once generation Y becomes green consumers, their “greening” will have ripple effects on their general behavior and ultimately contribute to the protection of the environment. n
The views expressed above are the author’s and do not necessarily reflect the official position of De La Salle University and its faculty and administrators.
 
Reynaldo A. Bautista, Jr. is an associate professor at the Ramon V. Del Rosario College of Business of De La Salle University. He teaches Marketing Research, Methods of Research, and General Marketing.
reynaldo.bautista@dlsu.edu.ph

Three essential steps to becoming more authentic

By Raju Mandhyan
TALK about being authentic and, often you will hear this quote from Paulo Coelho: “We are in such a hurry to grow up, and then we long for our lost childhood. We make ourselves ill earning money, and then spend all our money on getting well again. We think so much about the future that we neglect the present, and thus experience neither the present nor the future. We live as if we were never going to die, and die as if we had never lived.”
Most all our lives, we desperately struggle to find ourselves. We strive to live, and live out our lives exactly the way we want to but end up creating and living in contradictions. It is not that in the deepest of our hearts we do not know what we want. We do, but adapting and adjusting to a demanding world we let our true selves get corroded, get covered with gunk.
Yet from deep within there is that being, that energy and that soul that yearns to fly, to go and grab a fistful of the sky and claim it as our own.
In the history of mankind there have been a few who have flown so high and so purely in the skies of their own choosing. And, there are almost all of us who for scores of times in our lives have dug a window through that corrosion and that gunk that surrounds and made our presence felt. We have, at times, lived out our dreams and desires loudly and boldly. The question that arises is how to increase the frequency of these liberating moments and sustain them so that at the end of our days we can feel that, hey, I am ready to die because I have lived a full, fruitful, and an authentic life.
Inspired by an interview I conducted of Dr. Peter Senge a few years ago, it struck me living an authentic life at work and in society when we:
Step Up: In all circumstances, especially the most challenging ones our options eventually get boiled down to just two. Should we take the well-treaded and safe path or should we step up and take the road less traveled. The roads less traveled, or the right decisions that will make us stand apart and away from others are always packed with risk but the person who steps up to the calling of his inner voice, scales up the mountains of authenticity. Yes, it takes courage to be authentic. Yes, it takes gumption to stand up, speak up and move towards what your heart, mind, and soul tell you are the right things to say and do.
Step In: Daniel Goleman in his book, Focus, talks about how a bunch of preachers-to-be on the road to take up tests in compassion and kindness totally ignore a homeless person on the street asking for help. In their case, it was probably about lack of awareness but often in life, we prefer to stay away from trouble that doesn’t belong to us. In a highly interconnected world most everything does, in a way, belong to us. The other day, someone sent me a video of some folks torching the tongue of street dog. The thought in my mind was why would someone take a video of that and not stop the carnage? Or, when we see others dumping toxic waste and plastic into our rivers why don’t we step in. Stepping in into murky situations, if our conscience calls for it, is the authentic thing to do.
Stand Tall: Dr. Peter Senge in that interview, available on YouTube, claims that the eye cannot see the eye. We don’t ever know what the objective reality is because our perceptions, our lenses towards the world are tinted with our biases, our own agendas. Some of these, surely, are unconscious but a large number of those stains on our glasses are of our own making and the cleaner our windows are to the world the better we see it and the taller and prouder we can walk. Coming from clarity and approaching situations conscientiously will allow us to be ourselves, walk and stand tall in a volatile, uncertain, changing and an ambiguous world. Said once my favorite childhood author, George Bernard Shaw, “Best keep yourself clean and bright; you are the window through which you see the world.”
Authenticity is not just honesty, it is not just being frank and outspoken but being authentic is being true to you inner calling moment after moment. It is about stepping up to challenges, stepping into situations where the right thing needs to be done and also keeping your values and your visions clean.
We live in a world that is constantly changing. We do not have to be the change because every breath we take, every idea we think about, every word we utter, and every action that we take creates change. We do not need to apply force neither do we need to use undue power. We just live out our life with authenticity and gentle influence.
 
Raju Mandhyan is an author, coach, and trainer.

PHL takes on Kazakhstan in Asiad hoops bid opener

By Michael Angelo S. Murillo, Senior Reporter
THE Philippine Basketball Association-powered national team competing at the 18th Asian Games in Indonesia gets its campaign going, taking on Kazakhstan in a preliminary game in Group D set for 11 a.m. (Manila time) at the Gelora Bung Karno Basketball Hall in Jakarta.
It will be the first of two matches in Group D for the Philippine team, which is backed by Smart Communications, Inc., where it hopes to emerge in the top two in the grouping to advance to the next round of the Games.
The Yeng Guiao-squad is also grouped with powerhouse China in Group D.
Making up the Philippine team is the core of the Rain or Shine Elasto Painters in the PBA and backstopped by players from other teams in the league.
The players are Maverick Ahanmisi, Chris Tiu, Gabe Norwood, James Yap, Beau Belga and Raymond Almazan of Rain or Shine, and Christian Standhardinger (San Miguel), Stanley Pringle (NorthPort), JP Erram (Blackwater), Paul Lee (Magnolia), and Asi Taulava (NLEX).
In a very last-minute development, Filipino-American National Basketball Association player Jordan Clarkson of the Cleveland Cavaliers was granted permission to play for the Philippines in the Asian Games by the NBA.
After initially thumbed down to play, the Association “reconsidered” its decision and granted the Philippines’ request for Mr. Clarkson to play for the country.
Mr. Clarkson, who takes the place of Don Trollano (TNT), is reportedly on his way to Indonesia to join the national team hopefully in time for today’s game.
HURRIED PREPARATIONS
The Philippine basketball team goes into the Asiad off hurried preparations after it was left with limited time to prepare on the late decision if the country was to send a team or not.
Originally shelved as the Samahang Basketbol ng Pilipinas felt “the time and chance to participate in the 2018 Asian Games would not be optimal,” the federation reconsidered its decision, citing primarily the huge clamor from local basketball fans to have a team compete in the Games.
It made the announcement of the formation of the team on Aug. 5.
The interval in between decisions, however, left the national team with lesser time to assemble and prepare.
“We have limited time to prepare because of the delay that happened but that won’t stop us from giving our best. We have come up with this list of players because of familiarity. I have worked with the players of Rain or Shine while the others I have no problem working with them,” said Mr. Guiao of the mindset they have and the players who are part of the team.
Mr. Guiao, who is now coach of NLEX, used to handle Rain or Shine and led it two titles in the PBA.
CLARKSON FACTOR
With Mr. Clarkson joining the squad, the national team feels he can help its cause.
“That (Clarkson go-ahead) will be a big boost for us. He can definitely help us. I hope he is in shape. Well, I think even if he is not in shape he can still be a big help for us. He’s a big boost for basketball in the country being an NBA star wanting to play here. It says a lot about him as a person. I am looking forward to playing with him,” said Mr. Tiu in one of their practices before they left for Indonesia.
For today’s game, the Philippines is facing Kazakhstan, which finished fourth in the 2014 Asian Games in Incheon, South Korea.
Other groupings in the Asian Games have South Korea, Thailand, Mongolia and Indonesia in Group A; Iran, Syria and United Arab Emirates (Group B); and Qatar, Chinese Taipei, Japan and Hong Kong (Group C).
The Philippines-Kazakhstan match will be broadcast live over ESPN5.

National Basketball Association allows one-time exception for players seeing action in Asian Games

AFTER its policy on allowing its players to play in international tournaments was taken to task, the National Basketball Association (NBA) decided to grant a “one-time exception” for those seeing action in the 18th Asian Games in Indonesia.
In statement released to local media on Wednesday, the NBA, citing “a lack of a clear communication” of an agreement with the parties involved, said it had decided to give special exception from its existing policy in lending its players.
The action opened the doors for Cleveland Cavaliers guard Jordan Clarkson and Houston Rockets center Zhou Qi and Dallas Mavericks forward Ding Yanyuhang to represent the Philippines and China, respectively, in the event which is already under way in Jakarta.
“The NBA’s agreement with FIBA (world basketball governing body) stipulates that NBA players can participate in the Olympics, the FIBA Basketball World Cup, Continental Cup competitions and associated qualifying tournaments. Because the Asian Games are not one of those competitions, NBA players under contract are unable to participate,” the NBA statement read.
“However, due to a lack of clear communication of that agreement between the NBA and the Chinese and Philippines Basketball Federations, and after further discussions with both Federations, the NBA has agreed to provide this one-time exception,” it added.
The announcement came on the heels of the NBA coming under fire, especially from Filipino sports officials and fans, after it initially turned down the request to have Mr. Clarkson join the Philippine team.
The same policy was raised by the NBA in its first ruling on the case of Mr. Clarkson but left the policy open for questioning as it could not explain why Messrs, Zhou and Ding were allowed to play for China.
Mr. Clarkson is set to join the Philippine Basketball Association-powered national team, hopefully in time for its first game in Group D against Kazakhstan today.
The Philippines and China, meanwhile, collide on Aug. 21. — Michael Angelo S. Murillo

Tennis world to vote on Davis Cup shakedown

LOS ANGELES — The most radical overhaul in the 118-year history of the Davis Cup could be given the green light on Thursday as the tennis world gathers in Florida to vote on sweeping reforms which have divided the sport.
Around 120 delegates at the International Tennis Federation’s annual meeting in Orlando will decide whether proposals by federation chief David Haggerty are to be given the go-ahead.
Haggerty’s plan will see the Davis Cup’s sprawling existing format, stretched across the calendar year and played in all corners of the globe, condensed into a season-ending 18-nation event played at a single, neutral venue.
Haggerty told AFP in a conference call on Tuesday that the overhaul would boost the ITF’s ability to spread development funding across the globe, pumping around $25 million back into the sport.
“The ITF is the only organization that puts money into the development of the game,” Haggerty said. “And that’s what this project enables us to do. The money that we make will be put back to the nations for their development programs and the future of tennis.”
The reforms have the backing of a $3 billion partnership from the Kosmos investment group, founded by Barcelona football star Gerard Pique and supported by Japanese billionaire Hiroshi Mikitani.
The ITF maintains the new-look Davis Cup would boost the profile of the tournament, which was first held in 1900 when the United States defeated Britain at the Longwood Cricket Club in Boston, Massachusetts.
Under the new proposed format, 18 teams would play in the Davis Cup finale, split into six groups of three teams. Six group winners and two runners-up would then advance to knockout rounds.
Unlike current Davis Cup ties, which comprise four singles and one doubles, ties would feature only two singles and a doubles game.
Federation chiefs say the revamped competition would effectively create a fifth Grand Slam event, increase prize money and allow the Davis Cup to attract top players by freeing up space on the calendar.
Yet the changes have appalled some of the greatest names ever to grace the competition.
Past Australian Davis Cup captains and players including Rod Laver, John Newcombe and Lleyton Hewitt were united in condemning the proposed overhaul.
‘DEATH OF DAVIS CUP’
Newcombe, a five-time champion as a player, described the overhaul as “a recipe for the death of the Davis Cup as we know it.”
“The Davis Cup is 118 years old and was the forerunner that made tennis into an international sport,” Newcombe said.
Hewitt disparaged the changes as little more than a “money grab” which ignored the tournament’s history.
Haggerty however said Tuesday that while “change is difficult sometimes,” he had been encouraged by positive feedback from delegates in Florida this week.
“The mood is good. The reception has been very positive,” he said. “We just want to do the right thing for tennis…The new model allows the ITF to fulfil the mission in a much better way.
“Having more resources to put behind the development of tennis is the most important thing for an international federation.”
The overhaul has also won support from Serbian star Novak Djokovic.
The 13-time Grand Slam winner believes a change in format is long overdue.
“I think that format needs to be changed. And I’m all in favor of that,” Djokovic said in Toronto last week.
“You play one year, and then the next year you don’t play. It’s just the scheduling of this kind of format so far has been pretty bad.”
The Davis Cup reforms require two-thirds majority support from ITF delegates in Orlando on Thursday.
If successful, the new format would be launched in November of 2019, with Europe guaranteed to host the first two editions of the new-look event.
One complication however could well be the introduction of a revamped World Team Cup due to take place in Australia in the first week of 2020.
The tournament, which has the backing of the ATP and Tennis Australia, will feature 24 teams and offer prize money and rankings points.
ATP executive chairman Chris Kermode has acknowledged the problems of staging the new event just six weeks after the proposed Davis Cup, describing the scheduling as “insane.” — AFP

San Beda, San Sebastian on collision course today

By Michael Angelo S. Murillo, Senior Reporter
NATIONAL Collegiate Athletic Association rivals San Beda Red Lions and San Sebastian Stags collide for the first time in Season 94 today in a scheduled matchup at 4 p.m. at the FilOil Flying V Centre in San Juan City.
Currently charting contrasting paths early in the tournament, the defending champions Lions (5-0) look to stay unbeaten in the first round with a sixth straight victory while the Stags (3-5) shoot for consistency in winning as they try to make their way up the pecking order.
San Beda is coming off a narrow 80-76 victory over the Letran Knights on Aug. 10 where it relied on the all-around game of veteran Robert Bolick and clutch shooting of AC Soberano to hack out the dig-deep victory.
Bolick found multiple ways to elude Letran’s defense all game long en route to finishing with 20 points, 11 rebounds, and six assists while Soberano came up big in extra time, hitting two booming triples in overtime to help the reigning back-to-back champions in their cause.
“Credit to the players for stepping up in this game to get this tough win,” said San Beda coach Boyet Fernandez following their win.
San Sebastian, for its part, is fresh from a tough 78-76 loss at the hands of season hosts Perpetual Help Altas at the latter’s home in Las Piñas on Aug. 9.
With the score knotted at 76-all with 3.3 seconds remaining, the Stags saw the game slip away from their hands when the Altas scored a game-winning basket care off Prince Eze with half a second remaining.
It completed for Perpetual Help a charge back from as much as 21 points down and spoiled for San Sebastian an opportunity to win back-to-back games.
Preceding the San Beda-San Sebastian match is the battle between Perpetual Help (4-2) and Mapua Cardinals (2-5) at 2 p.m.

Special Asian Games emojis available on Twitter

FANS following the goings-on in the Asian Games in Indonesia will have their experience enhanced with the special emojis that Twitter has come out with.
In celebration of the biggest sport event in Asia, which officially kicks off on Aug. 18, Twitter has decided to launch three special emojis in the shape of: the official Asian Games logo, a torch that symbolizes the energy of Asia, and the three mascots — Bhin Bhin, Atung, and Kaka — that reflect Indonesia’s diversity with three animals, each from different regions in the country.
The emojis are available until October and will appear when the hashtags #AsianGames2018 and #AG2018 (the official Asian Games logo), #AsianGames and #18thAsianGames (three mascots), and #EnergyOfAsia (torch) are used in Tweets.
In the Asian Games in Indonesia, the Philippine campaign is set to be bannered by 272 athletes competing in 35 categories.
Filipinos throwing their support to the Philippine athletes can do it via Twitter by using the hashtags #LabanAtletangPilipino and #TeamPHIsaAsianGames2018. — Michael Angelo S. Murillo

Federer opens with win over Gojowczyk; Kvitova ousts Serena

CINCINNATI — Roger Federer began his US Open preparation with a quick 6-4, 6-4 defeat of Peter Gojowczyk in his first ATP Cincinnati Masters appearance since 2015.
The 20-time Grand Slam champion, who turned 37 last week, is pacing his tennis year, playing a limited schedule and skipping events when he feels the need to rest.
He has missed the last two editions of this tournament because of injury.
Eighth seeded Petra Kvitova used her precision serve to overpower Serena Williams 6-3, 2-6, 6-3 in their second round match on Tuesday night.
Federer’s defeat of the 47th-ranked German in 72 minutes marked his first step towards a possible eighth title at the tournament.
The contest was the first for the Swiss since losing to Kevin Anderson in five sets in the Wimbledon quarter-finals on July 11.
Eighth seed Dominic Thiem was forced to withdraw without hitting a ball. He was from a virus.
The Austrian played just one losing match last week in Toronto on the hardcourts since making a late switch from post-Wimbledon clay.
Nick Kyrgios served 39 aces, including one to save match point, to power into the second round with a dramatic 6-7 (2/7), 7-5, 7-6 (11/9) win over Denis Kudla.
Last year’s losing finalist finally saw off the American on his sixth match point.
The Australian will next face Croatian Borna Coric, who beat Daniil Medvedev 6-2, 6-3.
Weekend Toronto finalist Stefanos Tsitsipas tired late in a 7-5, 6-3 loss to Belgian 11th seed David Goffin.
South Korea’s Chung Hyeon rallied past a struggling Jack Sock for a 2-6, 6-1, 6-2 victory.
Chung handed the slumping American an eighth straight defeat, with Sock’s last win coming in the opening round at Rome three months ago.
Unseeded Milos Raonic advanced past Serb Dusan Lajovic 6-3, 6-3 at the combined ATP and WTA event, the last major tune-up prior to the US Open on August 27.
In the women’s draw, the second set of the Kvitova-Williams contest was significant for Williams because it was her first set win this season against a top 10 opponent.
OUT OF GAS
The 23-time Grand Slam champion won her first round match over Daria Gavrilova in straight sets, 6-1, 6-2, on Monday, but appeared to run out of gas in the third set against Kvitova.
Just two weeks ago, Williams suffered the worst defeat of her career in San Jose when she was crushed 6-1, 6-0 in 51 minutes by world No. 39 Johanna Konta.
“I’m still at the very beginning. You know, this is a long comeback. I just began. Definitely at the very, very beginning,” Williams said. “I’m getting there, and I’m going to just continue to work hard, and hopefully I’ll start winning more matches.”
Czech ninth seed Karolina Pliskova made a personal breakthrough as she beat Agnieszka Radwanska for the first time after seven previous straight-sets losses to the Pole, winning 6-3, 6-3.
“It was a tough round for me because I’ve never beaten her, never even taken a set,” said Pliskova. “I was so happy when I won the first set because I thought, ‘Finally, one set for me.’”
Australian 16th seed Ashleigh Barty defeated Czech teenager Marketa Vondrousova 6-3, 7-5, while 14th-ranked Elise Mertens topped Magdalena Rybarikova 6-4, 6-2. — AFP

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