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Fewer tax returns to file under TRAIN

Giving gifts on special occasions like Christmas, Valentine’s, birthdays, etc., is a tradition.  Most of us have sent or received lots of Christmas gifts. If you find giving gifts fun, you do an inventory of the names of your nephews, nieces and godsons and goddaughters. You don’t want to miss anyone on the Christmas list. You don’t want someone lonely on Christmas day.

If you missed Christmas, you can still give or have some for New Year’s celebration.

This year, some people will get gifts for the New Year.  If our interpretations are correct, tax compliance officers will be very pleased that under the Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law, the filing of certain monthly tax returns has been streamlined. Particularly, withholding tax returns listed below are now required to be filed on a quarterly basis, instead of on a monthly basis.

Final Withholding Tax (FWT) and Expanded Withholding Tax (EWT) returns: Under TRAIN, the return for FWT and EWT shall now be filed not later than the last day of the month following the close of the taxable quarter. Under the current regulations, withholding taxes under these returns are being filed not later than the 10th day, for manual filers, and 11th to 15th day, for e-FPS filers of the month following the close of the taxable month.

This means, filing becomes four times a year instead of 12. This doesn’t mean, however, that we can slack off in monitoring whether each income payment to local supplier has been correctly subjected to withholding tax. It is prudent for monitoring and evaluation to be done regularly, if not in real time. Another advantage is that in case there are misstatements in the first two months of the quarter, there is an opportunity to adjust on the third month, in time for filing the quarterly return.

Quarterly filing, instead of monthly filing, is significantly important in some cases for income payments to foreign suppliers. Transactions subject to FWT may sometimes need a longer period for evaluation. I have seen taxpayers who are torn between the option to withhold taxes, apply for tax exemption or lower tax rate, or take the risk not to withhold.  Now, taxpayers have more time to evaluate and assess their best option.

On another note, under the current rules, income payments to domestic or foreign suppliers are subject to withholding tax upon accrual or payment whichever comes first.  In practice, most of the small and medium entities withhold only upon payment. Thus, accrued expenses at the end of the period are not subjected to withholding tax. On the other hand, big entities withhold on their prepayments or accrual, but in most instances, accruals not supported by the invoice/billing, are not. In sum, expenses may only be subjected to withholding tax upon payment or upon receipt of the invoice/billing, depending on the practice of the entity.

Worry less because quarterly withholding tax return now will cover a longer period. This means that the gap between the tax rules and taxpayers’ practices will somehow be narrowed down. The taxpayer with accrued expenses, which are paid within the quarter, can now say that the withholding tax was remitted on time.

Value Added Tax (VAT): Starting 2023, VAT returns shall be filed and paid within 25 days following the close of each taxable quarter, as compared to monthly basis under the current rules.

In practice, there are many instances where there is excess payment in the quarterly VAT returns due to over-payment in the monthly declarations, which is bothersome when it accumulates. One of the reasons for excess payment is the late receipt of documents that will support the zero-rating or input VAT credits, such as the PEZA certificate of zero-rating, creditable withholding VAT certificates from the government, VAT invoices or official receipts from suppliers, and import documents from brokers, among others.

Given that monthly declaration and payment are no longer required, the taxpayer has more time to secure the above documentation, and thus avoid overpayment.

Other percentage taxes (OPT): Under TRAIN, the Commissioner shall no longer have the power to prescribe the time for filing of other percentage tax returns at intervals other than that prescribed under the Tax Code.

Under the current rules, certain OPT tax returns such as Gross receipts tax on interest and commissions of banks are filed on a monthly basis. Given that the return will now be filed quarterly, it will lessen the burden of banks to monitor which gain, income or transaction is realized at the end of the month for GRT purposes.

In addition to the above, TRAIN has now required that individual ITRs be filed on or before May 15 of the following calendar year, instead of April 15 under the current rules. As we are aware, this deadline coincides with the deadline for the annual income tax returns of individuals and corporations. Hence, we expect BIR offices and banks to be less congested.  We also expect less stress as there will only be one ITR due on April 15. Nonetheless, individuals are encouraged to file their ITRs early to have sufficient time to gather information or accomplish required attachments which might be known only upon filing.

The New Year and the effectivity of the TRAIN are fast approaching. As we are not yet familiar with the new rules, we hope the BIR can issue implementing rules in time. Are the e-FPS and e-BIR Forms already designed for quarterly filings?

The BIR may have taken steps to update its systems to the new rules. But if we want to stay as prudent as possible, we may continue to maintain the records compliant with current rules, until such time there are clear guidelines on how to transition to the new rules.

The streamlined filing of the tax returns is truly a wonderful Christmas and New Year gift. Tax officers of companies can have more time to focus on other tax projects to optimize tax compliance in the coming year.

Marie Fe F. Dangiwan is a manager with the Tax Advisory and Compliance division of P&A Grant Thornton.

Nation at a Glance — (12/26/17)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Central bank further relaxes rules on private sector’s FX access

THE BANGKO SENTRAL ng Pilipinas (BSP) has further relaxed its foreign exchange (FX) rules by making it easier for the private sector to tap such currencies, the monetary authority said in a press release on Friday.

The latest reform was approved by the Monetary Board “in line with the (Central) Bank’s thrust to further open up the economy through a more liberal policy environment”, the statement read, explaining that the latest moves “aim to promote greater ease in the use of the FX resources of the banking system for legitimate needs by further relaxing FX rules and further streamlining procedures and requirements”.

This initiative, in turn, aims ultimately “to help support economic activities”.

The circulars concerned, which BSP said will take effect on Jan. 15, 2018:

• remove as prerequisite for purely private sector loans — those without guarantee from or exposure of any government entity — prior central bank approval, requiring such loans only to be registered with the monetary authority. “The revised rules aim to further facilitate financing of critical, urgent projects and activites that can contribute to a more vibrant business climate conducive to growth,” the BSP said in its statement.

• open a six-month window during which purely private sector loans obtained without required BSP approval, and recorded in borrowers’ books as of the date of the circulars, can be registered with the central bank following the new guidelines. “BSP registration of these accounts will qualify the outstanding balances of the obligations to be paid… using FX resources of the banking system,” the statement explained. “Previously, these loans could be settled only with the borrower’s own FX or with funds sourced outside the banking system.”

Top-level budget body updates medium-term fiscal program

THE DEVELOPMENT Budget Coordinating Committee (DBCC) in its 171st meeting — and the last for the year — on Friday updated the government’s medium-term fiscal program with downscaled revenue projections due to the recently enacted tax reform law, while it left most macroeconomic assumptions unchanged.

Although the 2018 national budget — Republic Act No.10964 enacted last Dec. 19 — remained steady at P3.767 trillion, projected revenues are now at P2.788 trillion, 1.8% less than the P2.84 trillion in the DBCC’s June 9 meeting.

The new projection compares to P2.387 trillion in “emerging” actual revenues, according to a table provided by the Department of Finance (DoF).

Expenditures on the other hard are now at P3.313 trillion, 1.5% less than the initial P3.364 trillion, but 18.6% larger than the actual P2.794 trillion so far this year — putting the 2018 budget deficit at P523.7 billion.

“The medium-term fiscal targets of the government were updated by the DBCC with regards to revenues, disbursements and the financing of borrowings. This is in light of the developments and projections in fiscal and economic conditions in the medium-term,” the DBCC, chaired by Budget Secretary Benjamin E. Diokno, said in a statement.

“The DoF proposed the medium-term revenue program inclusive of the revenue-generating effects of the recently passed Tax Reform for Acceleration and Inclusion (TRAIN). The DBCC then approved the said medium-term revenue targets proposed by the DoF.”

The TRAIN’s revenues in 2018 are projected at P82.3 billion, according to the DBCC,38.49% less than the P133.8 billion previously expected.

Finance Secretary Carlos G. Dominguez III, however, said President Rodrigo R. Duterte’s veto of parts of the TRAIN law, RA 10963, as well as approval next quarter of a general tax amnesty, estate tax amnesty, Motor Vehicle Users Charge increase and easing of bank secrecy restrictions should help shore up additional revenues.

“Actually with the veto, we estimate the revenues will go up close to P90 billion. That’s only for 1A. Part B is P48 or 40 billion more. We expect that passed by the first quarter,” Mr. Dominguez said in a press conference after the DBCC meeting.

The budgets for 2019 to 2022 were likewise retained at P4.213 trillion, P4.676 trillion, P5.102 trillion and P5.661 trillion, respectively, but had tweaks in their revenue, disbursement and deficit programs, while retaining its deficit ceiling at 3.0% of gross domestic product (GDP).

The year 2019 will see revenues at P3.134 trillion from P3.244 trillion projected initially, and disbursements at P3.708 trillion from P3.82 trillion, yielding a fiscal deficit of P574.5 billion from P575.6 billion.

The year 2020 will see revenues of P3.53 trillion from P3.638 trillion previously, disbursements at P4.161 trillion from P4.271 trillion and a deficit of P630.4 billion from P633.7 billion.

The year 2021 will see revenues at P3.929 trillion from P4.019 trillion and disbursements at P4.622 trillion from P4.716 trillion, resulting in a P692.2-billion fiscal gap from P696.9 billion.

The year 2022 will see revenues of P4.387 trillion from P4.504 trillion, disbursements of P5.148 trillion from P5.272 trillion and a deficit of P761 billion from P767.9 billion.

BORROWING MIX
However, it adjusted its borrowing mix next year to 74-26% in favor of local sources, and programmed an 80-20% ratio for 2019 until 2022.

“That’s because there will be a global commercial bond issue; as you know these issues are lumpy,” said Bangko Sentral ng Pilipinas Monetary Board member Felipe M. Medalla when sought for an explanation.

The government also expects government debt to decline to 37.9% of GDP in 2022 from 42% this year.

“The medium-term fiscal program is geared to support the development objectives of the Duterte administration. We will ensure that all the revenues collected and monies disbursed will be for the benefit of our people,” said Mr. Diokno.

At the same time, the government retained its GDP and inflation projections.

“We think we’re doing well that we didn’t find a need to change much of our assumptions until 2022,” he said.

“The growth rate, we didn’t change it. 7-8% next year until 2022,” added the Budget chief.

Inflation forecasts were likewise kept at 2-4%, despite the tax reform’s expected inflationary effects that could contribute up to a percentage point.

“The long-term effects of TRAIN are different from short-term effects. The long-term effects are anti-inflation, to the extent that infrastructure will reduce transportation cost, increase productivity. Initially you will have cost-push effect in the higher indirect taxes. But our models say that at most 1%, 2018 and half a percent in 2019. If an increase in inflation is transitory, no need for a monetary policy response because after all eventually inflation will settle down,” said Mr. Medalla.

He added that the planned shift to tariff from quantitative restriction on rice imports should contribute to the easing of inflation on the staple.

The DBCC also kept merchandise import growth projections “unchanged” at 10% in 2018 and 2019 and 11% from 2020 to 2022, as well as the 364-day Treasury bill rates at 2.5-4% from 2018 to 2022, according to Mr. Diokno.

At the same time, the DBCC adjusted upward assumptions in foreign exchange, export growth and Dubai crude oil prices.

Merchandise exports are now expected to grow by 9.0% next year from 7.0% programmed in its June 9 meeting, while it retained the 9.0% assumption from 2019 to 2022, according to Mr. Diokno.

Peso-dollar rate assumption was raised to P49-52 from 2018 to 2022 from P48-51 previously.

Dubai crude oil price assumptions were likewise raised to $50-65 per barrel for next year until 2022 from $45-60 per barrel in 2018 and $50-65 per barrel for 2019 to 2022 in its earlier assumptions.

“There’s a slight adjustment on the peso from 2018 to 2022. We changed it to P49-52 per dollar this adjustment however should not be a cause of concern. A peso depreciation is actually favorable to our fiscal position,” said Mr. Diokno.

“We adjusted Dubai crude oil prices we raised it slightly to $50-65 per barrel in 2018, and we retain it until 2022. With regards to interest rates, we kept it at 2.5-4%,” he added. — Elijah Joseph C. Tubayan

BSP approves Landbank acquisition of postal bank

THE central bank has approved the acquisition of the Philippine Postal Savings Bank (PPSB) by Land Bank of the Philippines (Landbank), which intends to position the takeover target as a lender for overseas Filipinos.

At a signing ceremony involving the Bangko Sentral ng Pilipinas (BSP) and the Philippine Competition Commission (PCC), BSP Deputy Governor Chuchi G. Fonacier revealed that the Monetary Board gave its approval for the acquisition two weeks ago.

Malacañang signed an executive order in October, directing the PPSB to transfer all its assets to Landbank to create the Overseas Filipino Bank (OFB).

In the executive order, OFB will be “dedicated to provide financial products and services tailored to the requirements of overseas Filipinos, and focused on delivering quality and efficient foreign remittance services.”

BSP Governor Nestor A. Espenilla, Jr. is expecting the bank to be fully operational in February, as the monetary authority is waiting for the approval of the PCC.

“[We’re just waiting for the approval of the] PCC because [it was already approved] from the BSP side,” Ms. Fonacier noted.

PCC Chairman Arsenio M. Balisacan said the Landbank’s acquisition of PPSB is in the early stage of its review process.

“The documents have been submitted, now we’re in phase one which has a maximum period of 30 days. Hopefully, the process can move quickly,” Mr. Balisacan said.

BSP’s Ms. Fonacier clarified that the process of acquisition is separate from the process of establishing the OFB’.

“[They have to go through with the] acquisition [first] and then the creation of the bank,” she said.

The officials were commenting during a memorandum of agreement signing between the central bank and the PCC which aims to foster competitiveness among banks and other financial institutions.

The agreement is geared toward “efficient regulatory approach concerning the banking and financial industry,” Mr. Balisacan was quoted as saying in a statement.

“Our objective is for us to be able to enforce our law well by way of sharing information to the extent allowed by applicable laws,” the PCC chairman noted shortly after the signing, adding that the partnership will help promote and preserve the ease of doing business in the country.

The partnership will position the BSP to make recommendations regarding proposed mergers and acquisitions to the competition regulator.

“The BSP may certify to PCC the urgency of concluding a proposed merger or acquisition involving BSP-supervised financial institutions (BSFIs), in which the PCC shall take into account in the conduct of its review of the notification,” the statement from PCC read.

“The BSP may also recommend to PCC that a proposed merger or acquisition involving BSFIs may be exempted from prior notification, released from obligation to submit review requirements,” it said.

The agreement will also set up mechanisms to “boost detection, investigation and prosecution” of anti-competitive activities in the sector.

“The critical element here is facilitation of our processes in such a way that the process is efficient, that will not undermine the efficiency of business operations and at the same time will achieve consumer welfare,” Mr. Balisacan said. — Karl Angelo N. Vidal

SWS: Satisfaction with Duterte rebounds

By Arjay L. Balinbin

PRESIDENT Rodrigo R. Duterte’s net satisfaction rating has rebounded to +58 in the fourth quarter from last September’s drop of +48, according to the latest survey by the Social Weather Stations.

Mr. Duterte’s +58 net satisfaction rating (with 71% of respondents satisfied minus 13% dissatisfied) shows a 10-point rise and one grade up from last September’s “good” +48, which restores him in the “very good” range of +50 to +69, if still below his average rating of +64 last year.

By area, Mr. Duterte’s net satisfaction rating stayed “excellent” with a 5-point increase to +80 in Mindanao, and rose to “very good” in the +50 range elsewhere.

Satisfaction with Mr. Duterte is also very good among all classes, leaping from +35 last September to +65 this December among the Class E, which has borne the brunt of his drug war, as his critics have noted.

POLL ON MARTIAL LAW

In the same survey, a significant percentage of Filipinos are against Martial Law in Mindanao and believe the Armed Forces of the Philippines (AFP) can suppress the Abu Sayyaf and the ISIS-inspired Maute group even without extending it for another year.

The survey found that 62% agree with the statement, “Because the war in Marawi City is over, there is no need to extend Martial Law beyond its end date on December 31, 2017,” while 12% are undecided, and 26% disagree.

Meanwhile, 66% (12 points above the 54% in September 2017 survey) agree with the statement, “The Armed Forces of the Philippines or AFP can suppress the Maute group and Abu Sayyaf even without Martial Law,” 16% say they are undecided, and 18% disagree.

BY AREA

The survey also found that opposition to the Martial Law extension in Mindanao is highest in Metro Manila at 67%, followed by Balance Luzon at 63%, Mindanao at 62%, and Visayas at 55%, which means that majorities across demographics (ranging from 55% to 67%) oppose the extension of Martial Law in Mindanao beyond 2017.

As for the percentage of those who agree that “the AFP can suppress the Maute group and Abu Sayyaf even without Martial Law,” the figure increased by 16 points in Metro Manila, from 54% in September 2017 to 70% in December 2017, by 15 points in Balance Luzon, from 52% to 67%, by 8 points in the Visayas, from 58% to 66%, and by 9 points in Mindanao, from 52% to 61%, which means that across demographics, majorities (ranging from 55% to 72%) agree with the statement.

The noncommissioned survey, conducted Dec. 8-16, had face-to-face interviews with 1,200 adults (18 years old and above) nationwide: 300 each in Metro Manila, Balance Luzon, Visayas, and Mindanao (sampling error margins of ±3% for national percentages, and ±6% each for Metro Manila, Balance Luzon, Visayas, and Mindanao).

Duterte issues 5 vetoes vs. perks in tax reform bill

PRESIDENT Rodrigo R. Duterte exercised his Constitutional powers by issuing five line-item vetoes against tax perks contained in Republic Act 10963, the tax reform legislation which he signed this week.

In a letter issued by the Palace formally notifying the House of Representatives of RA 10963’s signing, a copy of which was distributed to reporters Friday, Mr. Duterte said he vetoed the 15% preferential tax rate for employees of regional headquarters (RHQs), Regional Operating Headquarter (ROHQs), Offshore Banking Units (OBUs) and petroleum service contactors and subcontractors.

He said 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.”

He added that “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 taxrates applicable to other individual taxpayers.”

He also vetoed zero-rated sales of goods and services by registered enterprises or those within tourism enterprise zones which cross into a separate customs zone, saying that the provisions “go against the principle of limiting the VAT zero-rating to direct exporters. The proliferation of separate customs territories, which include buildings, creates significant leakages in our tax system.”

Mr. Duterte’s third veto covers RA 10963’s exemption from the 3% percentage tax for professionals and self-employed with gross receipts not exceeding P500,000, noting that such entities are already VAT-exempt and 3% “is considered their fair share in contributing to the revenue base of the country.

A fourth veto concerns the exemption of petroleum products from excise tax if the products are used as inputs, feedstock or raw material “in the manufacturing of petrochemical products, or in te refining of petroleum products, or as replacement fuel for natural gas-fired combined cycle power plants.”

He said the exemption is ‘too general, covering all types of petroleum products,” and “may be subject to abuse.”

The fifth item vetoed concerns the earmarking of incremental tobacco taxes, with Mr. Duterte noting that the tax reform legislation “effectively emends the Sin tax law, or RA 10351, which provides for guaranteed funds for universal health care. The (vetoed) provision will effectively diminish the share of the health sector in the proposed allocation.”

At press time, government economic managers have not provided analyses of the line-item vetoes’ impact on projected revenue.

Various contentious items in the tax reform bill were allowed to stand, including the excise tax scheme for thermal coal which exempts domestric producers from VAT, and a smaller-than-expected increase in the tobacco excise tax, among others.

The tax reform program hopes to increase take-home pay for most wage-earners, compensating for the lost revenue with excise taxes on fuel, cars, sugar-sweetened beverages, and closing some VAT loopholes. It also simplifies the system for calculating the donor and estate taxes while lowering the rate charged.

SC orders release of alleged frat head detained in Senate for contempt

By Arjay L. Balinbin

THE Senate released on Thursday night, Dec. 21, alleged Aegis Juris fraternity president Arvin R. Balag, who had been detained in the Senate for contempt in connection with the death by hazing of Horacio “Atio” T. Castillo III.

According to Senate Sergeant-at-Arms Jose V. Balajadia Jr., Mr. Balag had been ordered released by a Supreme Court resolution dated Dec. 12 and signed by Clerk of Court En Banc. Atty. Felipa B. Anama.

The Senate ordered Mr. Balag’s detention on Oct. 18 after citing him in contempt for refusing to answer questions before the inquiry by the Senate committees on public order and dangerous drugs, justice and human rights, and constitutional amendments and revision of codes.

Mr. Balag, who had also refused to confirm or deny if he was president of Aegis Juris, petitioned the Supreme Court on Oct.25 to challenge his detention by the Senate.

Sought for comment, Senator Panfilo M. Lacson, chairman of the Senate committee on public order and dangerous drugs, said, “I was informed by OSAA (Office of the Sergeant-at-Arms) through my staff last night.”

The senator added: “While we reserve our right to invoke the inherent power of the Senate (and Congress) to compel witnesses and resource persons to testify in our inquires in aid of legislation as provided for under our rules and anchored on Sec 21, Article VI of the Constitution, we opted in the meantime to respect and comply with the SC resolution ordering the interim release of Balag even before its final ruling on the main case.

“We did so, all in the spirit of Christmas(,) not to mention our desire to avoid a constitutional crisis during this holiday season. Having said that, there is no saying that we are about ready to give up the rights of the legislature, being a co-equal branch of government. We will tackle this issue at the proper time as a collegial body.”

For his part, Atio’s father Horacio Jr. said: “Yes, narinig namin yung balita (we heard the news). We were hoping na sana tumagal pa siya sa (that he would stay longer in the) Senate detention, pero meron tayong sinusunod na batas (but we have laws to follow), and naniniwala kami na makakamit namin ang (and we believe that we will attain justice) that our Atio deserves. Hindi kami titigil. Lahat sila lalabanan namin (We will not stop. We will oppose all of them).”

NPA declares own unilateral holiday ceasefire

COMMUNIST rebels declared on Friday, Dec. 22, their own unilateral cease-fire “in observance of the Filipino people’s traditional holidays and the (Communist Party of the Philippines’) 49th anniversary” on Dec. 26.

Jorge “Ka Oris” Madlos, spokesman of the New People’s Army’s (NPA) National Operational Command, made the announcement on the Philippine Revolution Web Central (philippinerevolution.info). It came a few days after President Rodrigo R. Duterte declared a suspension of offensive military operations from Dec. 24 to Jan. 2.

The rebel ceasefire’s coverage, however, followed the two-stage ceasefire declared separately by the Department of National Defense — from 6:00 p.m. of Dec. 23 to 6:00 p.m. of Dec. 26, and from 6:00 p.m. of Dec. 30 to 6:00 p.m. of Jan. 2, 2018.

In an earlier report by independent media outfit Kodao Productions, Communist Party of the Philippines founding chairman Jose Ma. Sison said the National Democratic Front of the Philippines, which represents the rebels to the now-terminated peace talks with government, had recommended a cease-fire running for the same period’s as Mr. Duterte’s.

Mr. Sison said he had also recommended that the rebel cease-fire order include a warning to the NPA about the “lying, deceitful, attacking and occupying characteristics” of the Armed Forces of the Philippines, Philippine National Police, and paramilitary forces.

The rebel declaration released by Mr. Madlos said during the periods of the cease-fire, “all NPA units and people’s militias shall cease and desist from carrying out offensive military campaigns and operations against the uniformed armed personnel of the Armed Forces of the Philippines and its paramilitaries, and the Philippine National Police of the Government of the Republic of the Philippines.”

Soldiers and policemen “who have no serious liabilities other than their membership in their armed units shall not be subjected to arrest or punitive actions” and “may be allowed individually to enter the territory of the people’s democratic government to make personal visits to relatives and friends,” it added.

But it also included cautionary instructions for rebel units to “remain on active defensive mode in order to defend the people and revolutionary forces” and to “continue to enforce policies and laws of the people’s democratic government, perform necessary and appropriate functions of governance, and mobilize the people and resources in territories under its authority.”

The NPA said a “high degree of alertness and preparation” was necessary to prevent what it said was the deployment of military units to some 500 communities throughout the country during the ill-fated six-month unilateral cease-fires the government and rebels declared last year.

The rebels said they had received reports of at least 129 activists murdered since July last year, and the “illegal arrests of more than a thousand activists and their supporters and cases of mass evacuations due to militarization, intense bombings and shelling.” — interaksyon.com

ERC seeks Palace guidance on suspensions amid potential ‘paralysis’

THE suspension of the four commissioners of the Energy Regulatory Commission (ERC) will put on hold funding for P1.588 trillion worth of energy-related projects and capital outlays, ultimately affecting millions of Filipinos, the agency’s top official said on Friday.

“The paralysis starts today,” ERC Chairman Agnes T. Devanadera said in a news conference a day after she learned about the suspension of the ERC commissioners.

She said she had prepared a letter for submission to the Office of the President to lay down the impact of the suspension. No recommendation, suggestion or plan of action is in the letter but simply an enumeration of the possible result of any “non-action” on the part of the commission, she added.

Ms. Devanadera, who officially reported for work at the agency on Dec. 4, said she had learned about the suspension only yesterday when ERC employees were having their Christmas party.

She said the commissioners — Alfredo J. Non, Gloria Victoria C. Yap-Taruc, Josefina Patricia A. Magpale-Asirit and Geronimo D. Sta. Ana. — were “disappointed” by the decision of the Ombudsman. They were suspended for a year.

The Office of the Ombudsman ordered the suspension of the four, along with the previous ERC chairman, in connection with the revised implementation date of the competitive selection process (CSP), which it said favored a few power supply contracts.

CSP requires these contracts between power generation companies and distribution utilities to be subjected to price challenges, a process that is designed to lowering electricity costs.

Ms. Devanadera said the “debilitating impact” of the Ombudsman’s decision to suspend the four incumbent commissioners “will render the operations of the agency in severe paralysis.”

She said as a collegial body, the presence of at least three members of the commission is needed to constitute a quorum to enable the ERC to adopt any ruling, order, resolution, decision or other acts of the commission in the exercise of its quasi-judicial and quasi-legislative functions.

Ms. Devanadera said in terms of the assigned monetary value, the pending approvals are broken down as: P384.5 billion in capital expenditures; P2.2 billion in point-to-point transmission lines; P900 million in the sale of subtransmission assets.

Also pending are P1.2 trillion in power supply agreements, which the ERC counted as 135 pending cases. A total of P526.7 million accrued interest in feed-in-tariff allowance fund are also awaiting ERC action.

She said with the country’s 18.4 million energized households with four members each, then a total of 73.6 million Filipinos would be affected by ERC’s non-action.

Ms. Devanadera said a decision of the Ombudsman in administrative cases “shall be executed as a matter of course,” thus she was seeking the President’s guidance in its implementation.

She said she wanted to give “due respect” to the decision of the Ombudsman and would seek the President’s “sound discretion” on the matter.

She clarified that cases are directly against the four commissioners and not against the commission.

“Out of respect [to the Ombusman], they [the commissioners] are not doing the usual things, but there are many things that they can do, which is part of their function,” she said.

“I have embarked on a zero-backlog [program]. They have to go through their files,” she added.

Once the suspension takes effect, the earliest that the ERC can have a quorum is by mid-year when two commissioners retire and their replacements are appointed. Mr. Non and Ms. Yap-Taruc are retiring in June.

Ms. Devanadera said the suspension order will also have an impact on the government’s “Build, Build, Build” initiative, which has lined up many of the projects in the provinces.

“Investors might be discouraged from helping develop the energy sector,” she said.

“These are the hard facts,” she said.

Ms. Devanadera took over the ERC chairmanship after Malacañang ordered the dismissal of the commission’s previous chairman Jose Vicente B. Salazar in October after finding him guilty of simple and grave misconduct.

Government sets first quarter 2018 borrowing goal at P240B

THE GOVERNMENT is planning to raise P240 billion from the domestic capital market in the first quarter next year, the Bureau of the Treasury (BTr) said on Friday.

The issue size is higher than the P200-billion upwardly-adjusted borrowing program this quarter and the P180 billion programmed in the first three months of 2017.

In a memorandum posted on its Web site, the Treasury said it will float P120 billion of Treasury bills (T-bills) and another P120 billion of T-bonds.

Broken down, the government will offer P20 billion from P9 billion in 91-day papers, P6 billion in 182-day notes, and P5 billion in 364-day T-bills on Jan.17 and 31, Feb. 14 and 28, Mar. 14 and 28.

Up to P20 billion worth of 10-year tenor T-bonds will be auctioned off on Jan. 11 and Mar. 22.

Also up for sale are T-bonds maturing in three, five, and seven years.

In a separate memorandum, the BTr announced the schedule for government securities auction for the January to June period even as it did not disclose yet how much it will float in the second quarter.

“The Bureau of the Treasury (BTr) released its government securities (GS) issuance program for the first half of 2018, the first time it has done so covering a 6-month period. Market participants are now guided with the auction dates and tenors of GS issuance for the said period,” the BTr said in a statement on Friday.

The switch from quarterly to semi-annual announcement of the dates and tenors of T-bill and T-bond auctions comes after the Treasury held a workshop last 25 August 2017, the statement read.

“Under the program, the BTr intends to establish liquid securities on the 3Y, 5Y, 7Y, 10Y, and 20Y tenors while maintaining weekly auctions,” it added.

“Greater transparency, enhanced predictability, and a more stable issuance program allows for a more active participation of our GSEDs in the primary and secondary market. This, in combination with the implementation of the Enhanced GSEDs Program and GS Repo Program, will allow us to achieve our objective of a deeper and more robust government securities market, thus reducing risk premium and leading to lower borrowing costs for the Republic”, National Treasurer Rosalia V. De Leon was quoted in a statement as saying.

The government has set a gross borrowing target of P888 billion for 2018, with a plan to raise $200 million from yuan-denominated bonds and $1 billion of dollar-denominated global bonds. — E. J. C. Tubayan

Russian company considering Bataan pipe-coatings facility

MOSCOW-based BT SVAP LLC is interested in building a pipe-coatings facility in Bataan, the Department of Industry (DTI) said.

The DTI said in a statement that the agency and the Board of Investments (BOI) met with representatives from BT SVAP LLC on Dec. 20 to discuss investment plans particularly on a pipe-coating facility in the Philippines.

DTI said that the company is looking at building in Mariveles, Bataan.

“Igor Shaporin, BT SVAP LLC’s Chairman of the Board of Directors, expressed the company’s intention to put up a facility in Mariveles… where accessibility to sea and land transportation is easily available,” the DTI said in a statement.

The company’s intended location “would require a big land area.”

BT SVAP is an engineering, industrial and civil construction company, and also produces anti-corrosion polymer coatings for pipes and pipeline components.

“This could be a pioneer technology in the country. Apart from investments, sharing of technological know-how, and employment generation, this will also open opportunities for our domestic market and export industry,” DTI Secretary Ramon M. Lopez said in a statement. — Patrizia Paola C. Marcelo

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