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Foreign business groups have asked gov’t to retain workers’ tax perks, Roque says

FOREIGN business groups have asked the government to retain the tax perks of employees of regional headquarters (RHQs) and regional operating headquarters (ROHQs), among others, contained in the tax reform legislation, Presidential Spokesperson Herminio Harry L. Roque, Jr. said.

“There is an appeal of Foreign Chambers of Commerce to retain the tax perks of existing regional headquarters of multinational company[ies],” Mr. Roque said in a televised press briefing in Sagñay, Camarines Sur on Friday.

He added: “Now of course, President [Rodrigo R.] Duterte’s veto message strongly disagrees with the current system that offers reduced tax rates for qualified employees of regional headquarters and regional operating headquarters among others. To distinguish them from other similarly hardworking employees is in violation of the Equal Protection Clause of the Constitution.”

The spokesman explained that to further qualify present employees from future employees of ROHQs, OBUs (Offshore Banking Units), petroleum service contractors, and subcontractors is even more a violation of the Equal Protection Clause.

“Those enjoying the preferential rate are mostly managerial employees and those above them including Presidents and CEOs. Rank-and-file employees in the same company do not enjoy the same lower tax rates. President Duterte’s veto ensures the taxpayers are treated alike and high ranking and highly paid employees in the company are taxed appropriately as others.”

In December last year, Mr. Duterte vetoed the 15% preferential tax rate for employees of RHQs, ROHQs, OBUs, and petroleum service contractors and subcontractors, saying the preferential tax “is violative of the Equal Protection Clause under Section 1, Article III of the 1987 Constitution, as well as the rule of equity and uniformity in the application of the burden of taxation.”

“The overriding consideration is the promotion of fairness of the tax system for individuals performing similar work. Given the significant reduction in the personal income tax, the employees of these firms should follow the regular tax rates applicable to other individual taxpayers,” the President said in his veto message. — Arjay L. Balinbin

New law gives free irrigation for farmers

PRESIDENT Rodrigo R. Duterte on February 2 has signed into law Republic Act No. 10969, which grants free irrigation to farmers and condones unpaid irrigation fees.

The Free Irrigation Act would help “sustain the farm sector’s turnaround, which posted a 3.97% growth last year, after posting a 1.4% dip in 2016,” Senate President Pro Tempore Ralph G. Recto, one of the authors of the measure, said in a statement.

The new law also “grants free irrigation to farmers owning not more than 8 hectares of land, and condones unpaid irrigation fees by farmers who till the same size of land,” he added.

“Irrigation fees — pegged at the price of two cavans of palay per hectare during the wet season, and three cavans during the dry months — are waived,” Mr. Recto said.

“It may just be cappuccino money for coffeeshop regulars, but for those who work the land in never ending penury, those three cavans could spell the difference between famine or feast.”

NATIONAL TECH-VOC DAY
The President also approved the Republic Act No.10970 declaring the 25th day of August every year as the National Tech-Voc Day.

To ensure a meaningful observance of this special working holiday, all heads of government agencies and instrumentalities, including government-owned and -controlled corporations, local government units, public and private schools, and the basic technical-vocational, and tertiary education institutions, employers in the private sectors, and industry associations, shall encourage and afford sufficient time and opportunities for their employees to engage and participate in any activity conducted within the premises of their offices or establishments in celebration of the “National Tech-Voc Day.”

The annual program of activities and advocacy campaign shall be prepared and implemented with Technical Education and Skills Development Authority (TESDA) and the Department of Education (DepEd) as the lead agencies. — Arjay L. Balinbin

Megaworld eyes offshore gaming operators at Davao Finance Center

DAVAO CITY — Megaworld Corp. is in discussions with offshore gaming operators who have expressed interest in locating at the Davao Finance Center, which is targeted to open within the first half of this year.

“Davao is one of the key cities that they are looking into,” Megaworld Senior Vice-President Jericho P. Gotold media here Thursday.

The 14-storey Davao Finance Center, the first building that will be completed within the company’s Davao Park District township project, will have 26,000 square meters of office space that is positioned for licensed Philippine Offshore Gaming Operators (POGO) and business process outsources (BPO) companies.

The POGO program, with licenses issued by the Philippine Amusement and Gaming Corp., was launched in 2016.

For BPOs, Mr. Go said three to five companies have already expressed their intent to lease space at the center.

“Now that the building is ready… we know that BPOs both in Davao and other parts of the Philippines are very interested to start operating here,” he said.

The finance center has two lobbies, one for the “low zone” and the other for the “high zone,” each with exclusive elevator access.

Mr. Go said apart from efficient foot traffic management, the separate access points are also intended to address cultural “challenges.”

“Ideally, when you entertain BPO and POGO (in one building), they would have separate and exclusive access. For a basic reason, when you talk about POGO, these are Chinese nationals and more often than not they don’t speak Tagalog so in order to anticipate possibilities that there might be some challenges facing both Filipino and Chinese, we created two separate lobbies,” he said.

The Davao Park District would be among Megaworld’s first sites for its iTownship concept, wherein “smart” technology would be a salient feature in all the facilities.

“This (Davao Finance Center) will become one, if not the most, technological advanced office tower in Mindanao,” Mr. Go said. — Maya M. Padillo

HIV-infected workers forced to quit jobs, face discrimination due to lack of gov’t support

THE Philippines’ labor department maintains no records of anti-discrimination cases filed by workers infected with the Human Immunodeficiency Virus (HIV), New York-based Human Rights Watch (HRW) said in its latest report.

As a result, “there is little evidence that the government is adequately enforcing the laws to prevent and punish workplace discrimination” especially those against HIV-infected employees.

“The DOLE’s [Department of Labor and Employment] Bureau of Working Conditions, which monitors HIV in the workplace policy compliance, maintains no database on the number of complaints people living with HIV have filed with its office or other DOLE agencies, such as the National Conciliation and Mediation Board (NCMB), which tries to settle labor disputes before they escalate into litigation,” the group said in its report.

In their interviews with individuals living with HIV, the HRW found that “there is a lack of meaningful public education in the Philippines about HIV transmission and safer sex practices.”

“Workplace discrimination was ranked as among the most serious concern,” the organization said, citing its interviews with nongovernmental organizations and 33 people with HIV. “Many said they had no information about how to seek redress.”

With these findings, the group urged government to “create a major education and awareness campaign through various media to inform people living with HIV of their rights concerning workplace discrimination.”

The campaign “should direct concerned agencies to create and publish regularly updated databases of discrimination cases. And it should conduct an expanded public education campaign about HIV and address the wider issue of social stigmatization of people with HIV.”

“LGBT rights advocates say that this reflects the government’s longstanding failure to adequately address the HIV epidemic. For example, millions of Filipinos are not sufficiently educated about the role of condoms in preventing HIV transmission. Department of Health data indicates that only one out of five men who have sex with men have basic knowledge of HIV. Inadequate public education on HIV and the rights of people with HIV facilitates stigma and discrimination in the workplace,” the organization’s report said.

From “only four a day in 2010 to 31 a day as of November 2017; also, from just 117 cases 10 years ago, the total number of HIV cases as of November 2017 is 49,733,” the HRW said.

For its part, the government recently reported that “most new infections, up to 83%, occur among men or transgender women who have sex with men.”

HIV SUFFERERS ASKED TO QUIT, FACE JOB DISCRIMINATION
“Gus,” 21, was diagnosed with HIV in August 2016 while still a college student. After he graduated, he got a teaching job at a Catholic school in Pasay City. He initially did not disclose his HIV status, but later informed the school’s dean.

“I was asked to resign,” Gus said in an interview with HRW. “They wrote my resignation letter and asked me to sign it.” The dean told him that she wanted her teachers to be in good health. But what hurt Gus the most, he said, was when the dean told him he “might infect the students.”

That experience pushed Gus into depression, forcing him to say that he quit his job because the teaching load was just too much for him. He eventually found another teaching job at an international school teaching Tagalog. He had not yet disclosed his status to his new school, but he was confident it would be acceptable: “As long as I work hard, it shouldn’t be a problem to them.”

Meanwhile, “Marlon,” a twenty-three-year-old seafarer from Manila, learned he had HIV in December 2015. After his diagnosis, he enrolled in an HIV treatment program at a government hospital and continued applying for seafaring jobs. He was forthcoming about his HIV status, and the employment agency declined to hire him. “[Employment agencies] told me that the principal did not want to hire people with illnesses such as HIV,” Marlon said.

He applied for jobs through five other agencies for one year, but his applications were consistently rejected explicitly due to his HIV status. “I was denied each time because of my HIV status,” he said. “They would tell me that they’d call back, but no one ever did.” He eventually found Positibong Marino Philippines on Facebook and volunteered to help. “The manning [employment] agencies — that’s where the discrimination starts,” Marlon said.

“Andie,” 32, was working as a paralegal in a law firm in Iligan City in 2014 when HIV started to take a toll on his health. He grew thin and developed rashes on his arms and face, and on several occasions was absent from work. Andie said that his employer became upset with his absences and started telling people that he had HIV. “Each time a client asked [my employer] where I was, he would say I was in [nearby] Cagayan de Oro to deal with my AIDS situation,” Andie said. He said he was so humiliated he decided to quit his job.

Before leaving, he told his employer about the Philippine HIV/AIDS law and its prohibition against disclosing an employee’s HIV status. The lawyer responded: “Good luck in spreading your virus!” — Arjay L. Balinbin

BSP sets minimum liquidity ratio for small lenders

By Melissa Luz T. Lopez, Senior Reporter

THE CENTRAL BANK will impose liquidity standards on small banks by 2019, parallel to a measure imposed on bigger lenders in order to manage financial risks and maintain a sound banking system.

In a statement on Friday, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) announced the approval of the minimum liquidity ratio (MLR) which will cover thrift, rural, cooperative, and quasi-banks.

The new standard will require these lenders to keep liquid assets that can cover at least 20% of its total liabilities at any given time. Considered as eligible liquid assets are a bank’s cash on hand, other cash items, claims from the BSP, debt securities tagged with a zero risk weight, and deposits in other banks.

The new rule is designed to enhance the “resilience” of these supervised entities to episodes of a potential funding crunch without suffering losses or causing a widespread collapse across the banking industry.

The MLR is the equivalent of the liquidity coverage ratio (LCR) imposed on universal and commercial banks, which requires them to hold high-quality and easily convertible assets to cover expected net cash outflows for a 30-day period. Big banks must hold assets that can cover 90% of their monthly cash outflows this year, which will go up to 100% by 2019.

The BSP will use two approaches in determining the liquidity tool for a bank: small lenders which are subsidiaries of a universal or commercial bank will be covered by the LCR, while other stand-alone players will be covered by the MLR.

BSP Governor Nestor A. Espenilla, Jr. previously said that 531 banks and quasi-banks can comfortably meet the 20% liquidity standard. In particular, thrift banks posted an average ratio of 74.9%, while rural and cooperative banks clocked in at 68% as of March 2017.

The small players need to monitor their liquidity positions this year running up to the implementation of the 20% standard by Jan. 1, 2019.

“Once the minimum requirements are implemented in 2019, the BSP will address breaches in accordance with the persistence and gravity of the breach. Supervisory actions may therefore range from heightened monitoring, to requiring remedial measures, and finally, imposing sanctions,” read the BSP statement released Friday.

The MLR and LCR form part of the central bank’s moves to align local regulations with international standards under the Basel 3 framework, which prescribes supervisory tools to improve risk management and prevent a repeat of the 2008 Global Financial Crisis.

Melco revenues up 15.7%

THE developer of City of Dreams Manila grew its revenues by 15.7% in the fourth quarter of 2017, supported by the generally strong performance of its casino operations.

In a disclosure to the stock exchange on Friday, Melco Resorts and Entertainment (Philippines) Corp said net revenues came at $167.5 million in the three months ending December, against $144.7 million in the same period in 2016.

Adjusted earnings before interest, tax, depreciation, and amortization was up by 7% to $53.8 million during the fourth quarter, against $50.2 million in the comparable period last year.

Melco Resorts saw strong revenues across all segments, with rolling chip volume posting $2.9 billion for the quarter, 38% up year-on-year. The win rate for rolling chip was recorded at 3.1%, with expected wins within the range of 2.7% to 3%.

Mass market table games had a hold percentage of 30.9% for the period, allowing mass table revenues to inch up 26.9% to $189.2 million. Gaming machine handles enjoyed a strong quarter as well, as revenues grew 18% to $793.3 million.

Meanwhile, non-gaming revenues also climbed 11.7% to $31.4 million during the quarter.

The company noted that the unaudited financial results for the fourth quarter and full year 2017 results have also been filed with the United States’ Securities and Exchange Commission on Feb. 8.

Incorporated in 1974, Melco Resorts is one of the co-licencees that developed the integrated hotel, gaming, retail and entertainment complex called City of Dreams Manila in the state-run Entertainment City.

Shares in Melco Resorts lost 18 centavos or 2.07% on Friday, closing the week at P8.50 each. — Arra B. Francia

Authorities raid another factory that makes fake Mighty cigarettes

By Melissa Luz T. Lopez, Senior Reporter

AUTHORITIES raided another factory in Bulacan that made counterfeit cigarettes carrying the Mighty brand, the country’s Finance chief said.

Government operatives conducted a raid at RIS Compound in Barangay Tabe, where they discovered a factory of counterfeit cigarette packs at the back end of the site, Finance Secretary Carlos G. Dominguez III told reporters late Thursday.

The raid was conducted by members of the Philippine National Police Criminal Investigation and Detection Group and the Business Permit and License Office of the Guiguinto local government.

Fake cigarette cases — some of them carrying the Mighty brand — were seized in the factory, which is said to be owned by an Edward Ang.

Company executives of cigarette producers PMFTC Inc. Company representatives went on site to certify to the police that the cigarettes are counterfeit and that the facility “is not an authorized factory,” Mr. Dominguez said.

The Cabinet official noted that this is the second illegal factory of cigarettes in Bulacan discovered in the past four months. In November, authorities found out a factory of fake cigarettes located inside the Meycauayan Industrial Park which was razed by fire.

Manos Koukourakis, general manager of JTI Philippines, said separately that they commend the raid of the secret factory and committed to “step up support” in the government’s crackdown on illicit trade and counterfeiting.

JTI acquired embattled cigarette manufacturer Mighty Corp. last year as the Bulacan-based firm faced tax evasion charges worth P37.88 billion. Mighty paid a P25-billion settlement to the government, which covered P3.5 billion in unpaid excise taxes and P21.5 billion worth of internal revenue taxes of the company and its shareholders.

The Japanese firm bought Mighty’s assets at a deal priced at $496 million or around P46.8 billion.

Starting January, the Bureau of Internal Revenue will require all cigarette firms to adopt updated Internal Revenue stamps that bear tightened security features, as stated in Revenue Regulation No. 6-2017.

China Bank net profit up 15%

CHINA BANKING Corp. (China Bank) saw its net income grow in 2017 on the back of sustained growth in its core and fee-based businesses.

In a disclosure to the local bourse on Friday, China Bank said it posted a consolidated income of P7.4 billion last year, 15% higher than the P6.5 billion it recorded in 2016.

China Bank said its net earnings translated to a 9.9% return on equity, or net income earned as a percentage of stockholder investment. Its return on assets, or net income as a percentage of total assets, stood at 1.11%.

“2017 was a pivotal year in the transformation and development of the China Bank Group,” China Bank President William C. Whang was quoted as saying in the disclosure. “We grew as projected and I am pleased that our strong fundamentals and solid organic growth gave us the platform to meet the opportunities and challenges in 2018.”

The Sy-led lender’s net interest income rose 17% to P20 billion from the P16.7 billion recorded in a comparable year-ago period. This was driven by the 17% growth in its loan portfolio and its stable net interest margin of 3.09%.

Gross loans grew 16.7% to P454 billion from the P389 billion it booked in 2016 on the back of strong demand across all segments, particularly consumer loans and corporate loans, which grew 25% and 19%, respectively.

The bank maintained its asset quality despite the loan expansion. China Bank’s non-performing loans (NPL) 12%, leading to an NPL ratio of 1.4%, which it noted was “lower than the industry average.” Its NPL coverage ratio also improved to 97% from 91% previously on a consolidated basis.

Meanwhile, its total deposits climbed 17% to P635 billion, boosted by its new branches.

“Low-cost funds increased 24% to P343 billion and raised CASA (checking & savings accounts) ratio to a healthy 54%, while the loans-to-deposit ratio was steady at 71%,” the lender said in the disclosure.

Non-interest income grew 20% to P6 billion on the back of higher service fees and commissions, trust revenues, foreign exchange gains, as well as income from acquired assets.

Excluding trading gains and non-recurring income, China Bank’s core operating income grew 18%, driven by its core business and the improvement in the contribution of subsidiaries.

China Bank Savings, its thrift banking arm, tripled its net income last year, the parent bank noted. China Bank Capital, the lender’s investment house, recorded a 25% earnings growth from increased participation in capital market deals.

Overall, the lender’s assets grew 19% to P752 billion alongside the growth of its core businesses.

Total capital funds grew 32% to P84 billion following its P15-billion stock rights offer conducted in May.

China Bank’s total capital adequacy ratio — a measure of the bank’s financial strength — stood at 13.47%, above the central bank’s 10% minimum requirement. Its common equity Tier 1 ratio of 14.23% also exceeded the minimum ratio of 6%. — KANV

Duterte appoints 15 new officials

Malacañang on Friday announced President Rodrigo R. Duterte’s 15 new appointees.

Mr. Duterte signed the appointment papers of the following officials this week:

Eduardo V. Bringas, Executive Director at Presidential Anti-Corruption Commission, Office of the President.

Astravel P. Naik, Executive Director V at Commission on Filipinos Overseas.

David L. Diwa, Member of the Board of Directors at Bases Conversion and Development Authority.

Mark Steven C. Pastor, Assistant Secretary at Department of Transportation.

Leandro Angelo Y. Aguirre, Deputy Privacy Commissioner at National Privacy Commission.

Carlo Antonio B. Almirante, Member of the Board of Trustees at Government Service Insurance System.

Gerard A. Salapantan, Presidential Legislative Assistant at Presidential Legislative Liason Office.

Arthur N. Escalante, Philippine Contractors Accreditation Board Member at Department of Trade and Industry.

Henry Anthony M. Torres, Director II at Office of Civil Defense, Department of National Defense.

Joseph Ray P. Gumabon, Assistant Director General II at Civil Aviation Authority of the Philippines, Department of Transportation.

Thomas M. Orbos, Undersecretary at Department of Transportation.

Cesar C. Cassion, Director IV at Department of Health.

Tomothy John R. Batan, Undersecretary at Department of Transportation.

Rosie C. Javate, Director III at Department of Public Works and Highways.

Wilfredo S. Mallari, Director III at Department of Public Works and Highways. — Arjay L. Balinbin

PAL earns 4-star rating from Skytrax

FLAGSHIP carrier Philippine Airlines (PAL) has been certified as a four-star airline by international air transport rating organization Skytrax.

The four-star rating means that the airline company has excellent standards in terms of production and staff services across different assessment categories for both onboard and airport environments.

PAL is the only local airline company to get the four-star rating. There are 40 other airlines in the world which have received this rating.

PAL president and chief operating officer Jaime J. Bautista credited this to their upgrades in the last two years.

“Since 2016, we have embarked on a journey of rolling out in-flight and on-ground innovations, opened new routes, increase connectivity across PAL’s route network, added new aircraft to our fleet and importantly, invested in the Buong Pusong Alaga (whole-hearted training of all our cabin crew, ground crew, and service providers domestically and internationally in order to enhance the passenger travel experience and earn a higher Skytrax rating,” he was quoted as saying in a statement.

Since 2016, PAL has been adding airplanes to its fleet, with a current total of 88 aircraft. It has also renovated eight Airbus A330s to have tri-class cabins.

PAL will be launching non-stop services to Brisbane, New York, as well as flights to India and additional routes to China and Japan within the year.

By the next quarter, PAL will be opening its two-storey, 1,250-sq.m. International Mabuhay Lounge at the Ninoy Aquino International Airport Terminal 2.

Skytrax chief executive officer Edward Plaisted was quoted as saying that the new rating PAL recognizes the airline’s “improvements in terms of product change and development and enhancement of the front-line staff service.

“New and retrofitted aircraft have played an important part in the quality improvement process, and this looks set to develop further when Philippine Airlines introduces the A350 into their fleet,” he added.

“We look for consistency of quality in the four-star rating, and we look to Philippine Airlines to ensure this is duly delivered to customers.” — Anna Gabriela A. Mogato

Gov’t to hire foreign experts to examine bodies of Dengvaxia victims

THE government will hire foreign experts to examine the bodies of children who allegedly died due to Dengavaxia, President Rodrigo R. Duterte said.

Presidential Spokesperson Herminio Harry L. Roque, Jr. told reporters in a press briefing on Friday that the President had a meeting last Thursday, regarding Dengvaxia with some officials including Secretary of justice (DOJ) Vitaliano N. Aguire II, Volunteer Against Crime and Corruption (VACC) chair Dante Jimenez who now serves as chairman of the Presidential Anti-Corruption Commission (PACC), and Public Attorney’s Office (PAO) chief Persida R. Acosta.

“During the meeting, the President declared that those responsible should be held to account,” Mr. Roque said in Filipino. “He also ordered public hospitals to provide services to those who were injected with the vaccine and that the government will pay for their health costs.”

Owing to the lack of clinical pathologists in the country, Mr. Roque said that the President sought to get a foreign expert to undertake a study of those who died after they were injected with the Dengvaxia vaccine. — Arjay L. Balinbin

Tax collections in 2017 highest in 11 years

By Melissa Luz T. Lopez, Senior Reporter

TOTAL TAX collections in 2017 accounted for 14.3% of the Philippine economy to log the highest in over a decade, the country’s Finance chief said, which comes ahead of the implementation of tax reform.

Finance Secretary Carlos G. Dominguez III said total tax effort reached 14.3% of gross domestic product (GDP) last year, which is the highest in the last 11 years.

Mr. Dominguez said this posted a 0.6% increase from the previous year.

“This is the highest rate of improvement since 2009,” Mr. Dominguez said during the 2018 tax campaign kick-off of the Bureau of Internal Revenue (BIR) at the Philippine International Convention Center on Friday.

The BIR’s P1.779 trillion tax collections last year accounted for 11.26% of GDP. For 2018, the bureau is looking to collect P2.039 trillion revenues.

The agency’s 2017 collections accounted for 97.27% of its target and went up by 12.92% from a year earlier.

Mr. Dominguez said the BIR’s collection efforts will receive a boost from the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act towards realizing its collection target.

“While we expect some revenue losses in reducing the income tax rate, we should be able to offset these losses with a whole new range of excise taxes,” he added, noting that this will make it easier for the BIR to calculate and collect taxes “more efficiently.”

The Cabinet official said the large taxpayers unit is expected to generate bulk of the revenues, “in light of the cascade of tax reforms.”

Signed on Dec. 19 by President Rodrigo R. Duterte as Republic Act No. 10963, the TRAIN reduces personal income taxes for those earning below P2 million, alongside a simpler system for computing donor and estate taxes.

Foregone revenues will be offset by the removal of some exemptions to value-added tax; increased tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for stocks not in the stock exchange, and stock transactions; and new taxes for sugar-sweetened drinks and cosmetic enhancements.

The government is looking to collect P82.3 billion from the TRAIN law this year, which will support the Build, Build, Build initiative of the Duterte administration.