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Updated revenue estimate allays dilution fears for tax reform in the Senate

AMENDMENTS to the Senate’s tax reform bill — which had initially halved collections projected from the version approved by the House of Representatives last May — have raised forecast revenues that now top even the target of the Department of Finance (DoF), the head of the Senate Ways and Means committee said in a press release on Wednesday.

“We were able to meet the revenue target using the more comprehensive and accurate data that the DoF has provided the committee after the filing of the committee report [in the plenary],” the statement quoted Senate Ways and Means committee Chairman Senator Juan Edgardo “Sonny” M. Angara as saying.

Senate Bill No. 1592 — which has worried credit raters and economists due to the dilution of projected revenues that are otherwise supposed to help finance the government’s P8.44-trillion infrastructure program till 2022 — is now estimated to yield P159.5 billion in the first year of implementation, compared to just P59.9 billion when the measure secured Ways and Means committee approval in September.

The latest estimate also compares to House Bill No. 5636’s P119.4 billion when this version was approved on third and final reading last May 31, and the DoF proposal’s P149.6 billion (which itself was scaled down from P157.2 billion originally).

Mr. Angara attributed the revenue projection boost to the repeal of certain value added tax (VAT) exemptions that raised estimated additional revenues by P14 billion to P45.5 billion and to the doubling of prevailing documentary stamp tax rates to yield some P40 billion. Specifically, those whose rates doubled during the period of interpellations in plenary session included the stamp tax on bank checks (to P3 from P1.50 currently), on the original issue of shares of stock (to P2 from P1), on sale or transfer of shares of stock (to P1.50 from P0.75) and on certificates of profit or interest from property (P1 from P0.50).

FLAGSHIP
It will be recalled that his purported control of Congress notwithstanding, President Rodrigo R. Duterte had met leaders of both chambers, and separately with members of the Senate majority bloc, in mid-March to emphasize the need to approve the measure after noting “resistance” and “rough sailing” then in the House.

The first of up to five tax reform packages cuts personal income tax rates and offsets projected foregone revenues from this step by removing some VAT exemptions, increasing excise taxes on oil products and automobiles, introducing a sugar excise tax, as well as simplifying estate and donor’s tax rates, among others.

No property bubble in sight for now — UA&P

By Melissa Luz T. Lopez
Senior Reporter

THE PHILIPPINES is far from seeing a property bubble amid buoyant demand for both residential and commercial space, with the influx of more foreign investors driving demand for real estate amid limited supply.

David T. Leechiu, president and chief executive officer at Leechiu Property Consultants (LPC), said demand for real property will soar across segments over the next few years driven by increased investments to the Philippines.

“Next year, you have the removal of many industries from the negative list. Everyone including the President has been talking about liberalizing many more industries that are only for Filipinos and [in which] no foreigners are supposed to participate,” Mr. Leechiu said during the Year-end Business Economics Briefing of the University of Asia & the Pacific (UA&P) yesterday.

“This means that more companies will start buying existing companies and expanding their presence in the Philippines.”

The government is moving to allow foreign contractors to take on public construction projects under a more “aggressive” Foreign Investment Negative List that is now up for approval by President Rodrigo R. Duterte, alongside opening up retail trade further, as well as professions and public utilities to foreigners.

For business process outsourcing (BPO) alone, the property consulting firm sees a need for 450,000-650,000 square meters (sq.m.) of office space next year, against the 390,000 sq.m. available.

“As we get closer to the new year, more and more space of the PEZA (Philippine Economic Zone Authority) will be taken up… There’s a lot of office space under construction. We think there’s going to be a glut in office space for the second half of 2018 that will last all the way until 2019, and it will stabilize in 2020 because all the supply will get absorbed,” Mr. Leechiu said.

“There clearly is a gap between supply and demand,” he added, noting that slow approval of ecozone sites is constraining available space for business.

Take-up of commercial space in Metro Manila is shaping up for another record at 750,000 sq.m. this year, largely due to sustained though slower BPO growth.

The entry of more Chinese and Japanese companies — amid even warmer tries under Mr. Duterte — should boost demand further.

Mr. Leechiu said Chinese online gaming firms were first to venture into the Philippines after Mr. Duterte announced in a speech in Beijing in October last year his “separation” from the United States and his realignment with China and Russia.

Mr. Leechiu said he expects banks, energy, food and others from the mainland to follow.

The LPC executive sees the share of BPO rentals shrinking with Chinese gaming operators — who now have a third of market share — taking a bigger slice of workspace leasing.

Country risks in terms of possible policy shifts and political noise could have some foreign firms “rethinking” expansion plans here, even as Mr. Leechiu noted that such headwinds have become a “way of life” here.

The emergence of flexible, “co-working” spaces are likewise pushing rental rates up, the property expert said.

On the residential front, worsening road congestion also pushes up demand for condominiums and apartments closer to workplaces among the mass market.

Robust demand coupled with limited supply has been driving the increase in property prices, quelling fears of a bubble.

“For as long as debt levels continue to be low — and it looks like it is — then unlike the boom from 1992-1997 where most of that growth is debt-fueled, this boom involves very little debt. You’re not seeing debt artificially inflating prices yet,” Mr. Leechiu said.

UA&P economist Victor A. Abola also allayed concerns over a real estate bubble and overheating of the overall economy, with actual demand driving prices higher.

“We are deviating from the threshold and we’re actually far from that… Developers are slowing from the 2012-2013 peak,” Mr. Abola said, even as he flagged an oversupply in the luxury segment for multimillion-peso properties.

To add, he said real estate developers are still unable to meet the annual requirement of about 325,000 new residential units and a three million backlog for the low-cost segment.

The economy is likewise far from overheating, with credit growth seen manageable and upbeat industrial sector driving further expansion.

Mr. Abola sees Philippine gross domestic product expanding by 6.9% this year and by 7.1% in 2018, supported by robust domestic demand and fuelled by rising investments.

Both forecasts render the government’s growth targets doable, while keeping inflation in check in the years ahead.

S&P says ‘impressive’ Q3 PHL growth to warrant forecast hike

By Melissa Luz T. Lopez
Senior Reporter

S&P Global Ratings will likely increase its gross domestic product (GDP) growth forecast for the Philippines in the wake of the faster-than-expected expansion last quarter.

In its monthly report, the international debt watcher said the “impressive” 6.9% GDP growth clocked in the July-September period showed that the Philippine economy could expand faster than the 6.4% pace it has projected for 2017.

“The surprise in Q3 GDP puts upward pressure on our current 2017 forecast of 6.4%, even as sequential growth suggests a slight moderation on the cards for the coming quarters,” S&P said in its Asia-Pacific Economic Snapshots report for November.

A 17.2% surge in goods exports provided a big push for GDP growth during the quarter to add to the buoyant business process outsourcing sector, helping offset a slowdown in domestic consumption growth to 4.5% from 7.2% a year ago.

S&P has held on to a 6.4% growth forecast, but now sees an upside to this figure given latest developments. Economic growth averaged 6.7% in the nine months to September to log within the government’s 6.5-7.5% target, according to the Philippine Statistics Authority.

Economic managers said domestic activity will likely pick up further during the last three months of the year as more infrastructure projects are rolled out, coupled with the seasonal boost in household spending in time for the Christmas season.

In a separate report, analysts from First Metro Investment Corp. said the economy is well on track to hit their 6.5-7% forecast for the full year, supported by improving investor confidence as government spending picks up as promised.

A pickup in economic activity in the United States, Europe, Japan and China would also lift domestic conditions, FMIC said: “[W]e think exports will accelerate further in Q4, and provide the additional thrust to bring Philippine GDP growth within government targets.”

POLICY TIGHTENING BIAS
For S&P, upbeat growth prospects will likewise prompt the Bangko Sentral ng Pilipinas (BSP) to “shift to a tightening bias” in the latter part of the year.

But the BSP will not have to raise interest rates just yet given manageable inflation and uncertainty on the timing of succeeding rate hikes in the United States.

Inflation has averaged 3.2% from January-October, comfortably within the 2-4% target band.

“External factors continue to be the main source of economic risks, whether from rising protectionism overseas, geopolitical tensions or uncertainty in financial markets that could lead to capital outflows,” the debt watcher added.

BSP Governor Nestor A. Espenilla, Jr. has similarly flagged uneven monetary policy conditions in advanced economies as the biggest source of volatility for financial markets, but said that the central bank has “several anchors of stability” to weather these headwinds.

For its part, S&P said the country’s current account deficit — the first in 15 years — could trigger more episodes of sudden capital outflows amid heightened market uncertainty.

The central bank expects the full-year current account gap to settle at roughly $600 million, equivalent to 0.2% of GDP, reversing a $601-million surplus in 2016 amid increased importation of raw materials and capital goods as the Philippine government pushes its ambitious infrastructure spending plan.

The country’s balance of payments position stood at a $1.735-billion deficit as of end-October, substantially wider than the $500-million gap BSP expects for the entire 2017.

The Philippines currently holds a “BBB” rating — a notch above minimum investment grade — with a “stable” outlook from S&P.

Eagle Cement on track to hit P4.3-B profit target

EAGLE CEMENT Corp. (ECC) projects to grow its revenues by 20% for 2017, in order to hit earnings of at least P4.3 billion in the same period. 

“I think for year 2017, our revenue will grow by at least 20% up to about full year is about P15 billion. And gross profit of about more than P7 billion, and net income of maybe P4.3 [billion] to P4.5 billion,” ECC Chairman Ramon S. Ang told reporters in a briefing after the company’s annual shareholder meeting in Mandaluyong City yesterday. 

ECC has so far generated a net income of P3.29 billion for the first nine months of 2017, growing by 7% amid stiff competition and softer prices.

The listed cement manufacturer expects to sustain its growth until 2018, with the completion of its third cement line in Bulacan by 2018. This will bring its annual capacity to 7.1 million metric tons (MT), from the current level of 5.1 million MT. 

“It will continue because line 3 of (ECC) will start with production about January or February, but it’s not yet full production because usually there’s bottlenecking in the first six months,” Mr. Ang explained. 

With this, ECC targets to increase its sales by 35% in 2018, or up to 130 million bags. Mr. Ang noted this comprises a market share of around 25%.

This will allow the company to book at least P6.5 billion in earnings for next year, amid a gross profit of P10 billion, according to Mr. Ang. 

CEBU EXPANSION
Also in the pipeline for its expansion program is the construction of the company’s fourth cement line in Cebu that would expand its reach to the Visayas and Mindanao regions.

ECC has already broken ground for the P12.5-billion plant that would add another two million MT to its capacity, bringing its overall capacity to 9.1 million MT. 

“This groundbreaking brings us a step further to achieving our long term goals as a company, which is to strengthen the brand and increase market share. We hope to continue succeeding by increasing capacity to better serve our consumers nationwide,” ECC President and Chief Executive Officer John Paul L. Ang said during the shareholder meeting. 

Should other cement companies withhold their expansion plans, the completion of the Cebu plant by 2020 would make ECC the largest cement firm in terms of manufacturing capacity. 

Asked if the company has acquisition plans, the ECC chairman said: “It is very very seldom to come by an opportunity to acquire cement plant. And most of them are now controlled by the Big Three.” 

Shares in ECC lost six centavos or 0.41% to close at P14.70 each at the stock exchange on Wednesday. — Arra B. Francia

Bids for term deposits drop after RTB auction

By Melissa Luz T. Lopez,
Senior Reporter

TERM DEPOSITS offered by the Bangko Sentral ng Pilipinas (BSP) yesterday saw tepid demand, with banks left with a smaller amount of excess funds to deploy as they opted to purchase retail bonds offered by the government.

Bids for Wednesday’s auction of term deposits totalled a mere P92.776 billion, sliding from the P114.346 billion received a week ago and settling well below the P130 billion which the central bank wanted to sell, with the month-long instruments not even halfway filled.

Banks crowded the seven-day tenor as offers reached P52.415 billion, up from the P45.16 billion received last week and surpassing the P40-billion auction size. As a result, yields stood barely changed at 3.4057% from 3.4054% previously.

On the other hand, tenders for the 28-day term deposits slid to P40.361 billion against the P90-billion offering. The amount likewise dropped from last week’s P69.186 billion.

As a result, the average rate steadied at 3.4926% from 3.4933% a week ago, hovering close to the 3.5% ceiling set by the central bank.

The term deposit facility is currently the central bank’s main tool to capture excess liquidity in the financial system by allowing banks to place extra cash they hold, in exchange for a small return. Through this, the BSP expects to influence market rates to log closer to the 3% benchmark rate, coming from below the 2.5% floor of the interest rate corridor.

BSP Deputy Governor Diwa C. Guinigundo said the weak demand seen during the exercise reflected “lower excess liquidity” as banks opted to invest these funds on instruments with better yields.

“This is due to the recent issue of P130 billion in retail Treasury bonds (RTB) by Bureau of the Treasury,” Mr. Guinigundo said in a text message to reporters, which served as a fresh avenue to deploy the surplus funds apart from granting more loans, bond investments, and foreign currency purchases.

The government ramped up the RTB volume from an initial P30 billion following “tremendous” demand. The five-year papers come with a 4.625% coupon rate and may be availed of by individual investors from Nov. 20-29. 

“[T]he expected US Fed tightening in December also underlies this large undersubscription,” the central bank official added, reflecting a wait-and-see stance taken by market players.

Investors are on the lookout for a fresh rate hike from the United States Federal Reserve during their Dec. 12-13 review.

The central bank will again offer P130 billion in term deposits next week.

BSP Governor Nestor A. Espenilla, Jr. has cited monetary policy tightening in advanced economies as a key risk to financial markets, with the fresh “lift-off” expected to trigger bouts of volatility over the near term.

Despite this, the Philippine economy remains well-equipped to ride these headwinds and maintain price and financial stability.

BPI to open more new, refurbished branches

BANK of the Philippine Islands (BPI) is looking into opening new and refurbished branches as it ramps up its presence across the country.

At the opening of a new branch in Makati on Tuesday, BPI retail banking head Joseph Albert A. Gotuaco said the Ayala-led bank is looking to add nine new branches until the end of the year and 17 more in 2018, which will add to its current 841 branches.

“Yes we are [looking to open more branches.] I could see us adding another 20 to 30,” Mr. Gotuaco said.

“The central bank has given us permission to go up about almost 50 to 60 branches so we would use up all the licenses pretty soon between this year and next year.”

However, Mr. Gotuaco noted that the lender is more inclined to refurbish more branches to refresh the bank’s branding.

“What we focus on a lot that is quite different from our competition is that we are refurbishing quite a few branches… This is quite unique for us because we’re not seen as open, bright and modern. People think of us as 166-year-old [bank], but here it’s fresh and bright,” he noted.

On Tuesday, the bank started this as they opened a new flagship branch at the Insular Life building in Makati.

The 680-square meter branch situated along Ayala Avenue and Paseo de Roxas will complement other branches nearby. BPI also intends to cascade the new design to three to four branches in the Makati central business district.

The Insular Life branch features lounges for preferred customers, safety deposit boxes, as well as trusted advice corners where clients can course their queries.

“We are continually enhancing our customers’ banking experience and developing innovative products and services that cater to their needs,” BPI President Cezar P. Consing said in a statement.

“It is not only about expanding our branch footprint, but also about offering what our customers need, and being present where our customers need us to be.”

Meanwhile, Mr. Gotuaco said the third biggest bank in asset terms remains committed to shield customers against cyber attacks.

We’re very sensitive to the protection of our customers. We spend a lot on security, we monitor the incidents of security and frankly, we’re quite pleased with the relative safety that [we have],” Mr. Gotuaco noted.

He added that BPI has advanced information on how other banks are attacked by hackers, giving them a head-start in case of an attempt.

“Whether it’s on the ATM (automated teller machine) or in mobile phone or computer, we have advanced information how other banks get attacked. We don’t want to wait for criminals to come here to the Philippines to implement their ideas. We watch that before it comes,” he said. — Karl Angelo N. Vidal

Millennials are the ‘missing voice in the boardroom,’ says expert

By Krista A.M. Montealegre,
National Correspondent

THE next generation of leaders in some of the country’s biggest conglomerates are taking corporate governance seriously, as businesses take on unconventional threats in the digital age.

During the fourth Securities Exchange Commission-Philippine Stock Exchange Corporate Governance Forum in Pasay City on Wednesday, De La Salle University Prof. Benito L. Teehankee said millennials are the “missing voice in the boardroom” that will help businesses understand a generation reshaping consumer preferences and disrupting business models.

Apart from this, a millennial perspective can help companies become more transparent and accountable, adopt an inclusive business model and implement sustainable and environment-friendly practices, Mr. Teehankee said.

“The idea of governance and transparency is more innate in millennials than anyone else because of the natural access to flow of information,” said Mariana Zobel-Aboitiz, general manager of Ayala Malls The 30th and eldest daughter of Ayala Corp. Chairman and CEO Jaime Augusto Zobel de Ayala.

Being with the country’s oldest conglomerate, Ms. Zobel-Aboitiz said she is aware of how corporate governance has played a critical role in “driving consistency and continuity in what we do and our values.”

“Our President and Chief Operating Officer Fernando Zobel de Ayala said it best that earning the Filipinos’ trust has been central to the success of the company for so many years. These internal and external checks that are driven by prioritizing corporate governance has allowed us to build our relationship with the Filipino consumer,” she said.

Danel C. Aboitiz, president of Aboitiz Power Corp.’s oil business unit and son of businessman Endika Aboitiz, stressed the importance of operating with a social license and cooperating with stakeholders because of the growing interdependence between companies and societies.

Poverty alleviation and addressing inequality will be the greatest challenge of millennials, Solar Philippines President Leandro L. Leviste said, noting that the Internet has increased this generation’s awareness of pressing global issues.

Hans T. Sy, Jr., vice-president of SM Engineering, Design and Development, said millennials have adapted to two decades of technological advancements, citing how he was taught to write a letter, use a telephone, send e-mails and use instant messaging applications like Viber.

“We are fully capable of handling all these potential uncertainties and challenges because God knows we were dealt these uncertainties and challenges growing up,” Mr. Sy, grandson of tycoon Henry Sy, Sr., said.

CYBERSECURITY
Corporate boardrooms are urged to embrace a proactive role in establishing a cybersecurity policy against a backdrop of a rapidly evolving risk landscape for businesses.

Federal Bureau of Investigation Supervisory Special Agent Joshua T. Farlow estimated the global cost of cybercrime will “get remarkably worse” to anywhere between $3 trillion and $6 trillion by 2021.

“It’s not a question if your systems can be hacked or not. It’s a question of what will you do when the attack happens,” said Jonathan Gerard A. Gurango, independent director at Xurpas, Inc.

For Isabel Pastor, head of enforcement and cooperation at the International Organization of Securities Commissions (IOSCO) — the agency that develops and promotes standards for securities regulation — a weak domestic financial system is a systemic threat to both domestic and global stability.

Ms. Pastor said the Philippines is among the 28 non-signatories to the Multilateral Memorandum of Understanding Concerning Constitution and Cooperation and the Exchange of Information (MMOU), which facilitates the integration of securities markets.

The SEC is pushing for the amendment of the Securities Regulation Code (SRC) to gain access to every document or record in investigations relating to securities, among others.

“This information, we might get through the Anti-Money Laundering Council, but under IOSCO, this power should be a power possessed by the securities regulator. The layering is not acceptable to IOSCO,” SEC Commissioner Emilio B. Aquino said.

SEC Chairperson Teresita J. Herbosa said the agency has received the approval of IOSCO on the compliance of the proposed SRC amendments to MMOU requirements, and the bill has gained support from Congress.

Industry stakeholders backed the amendment of the six-decade-old Bank Secrecy Law, which negatively promotes the Philippines as a haven for money laundering and tax evasion.

“We really look for market stability and transparency, and the improvement in the Bank Secrecy Law is a step towards greater financial market stability,” First Metro Asset Management, Inc. President Augusto M. Cosio, Jr.

Peso extends climb

THE PESO continued its rally against the dollar on Wednesday amid market caution over developments in the US.

The local currency closed at P50.62 against the greenback yesterday, gaining 12 centavos from Tuesday’s P50.74-per-dollar finish.

This is the peso’s best finish in more than three months or since Aug. 9’s P50.575-per-dollar close.

The peso opened the session stronger at P50.61 and registered an intraday high of P50.575. Yesterday’s low, meanwhile, stood at P50.67 versus the greenback.

Dollars traded slid to $533 million from Tuesday’s $584.9 million.

Traders interviewed said the stronger peso is in line with the movement of Asian currencies as the fifth round of talks on the North American Free Trade Agreement (NAFTA) yielded little results.

“The market traded lower [yesterday], I think overnight there’s a news regarding NAFTA, triggering the dollar to weaken,” a trader said over the phone.

While NAFTA’s fifth set of talks saw some progress in some technical terms, the more controversial issues such as the intention of the US to terminate the trade deal easily was met with opposition from Mexico and Canada.

“The peso continued to appreciate [yesterday] amid inflation and policy uncertainties, which weighed on the US yields. There was also caution ahead of the FOMC minutes,” Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said in an e-mail.

“I don’t see any bad news that will make the peso weak,” another trader said. “Especially that Thursday and Friday are remittance days so we’re going to see a lot of selling.”

Traders said the peso will likely trade between P50.45 and P50.90 versus the dollar today, as Mr. Dumalagan noted that “[t]he dollar might recover due to likely hawkish FOMC minutes, which keep open the chances of another US rate hike this December.” — K.A.N. Vidal

San Miguel planning to merge packaging unit with SMFBI in the future

By Arra B. Francia, Reporter

SAN MIGUEL Corp. (SMC) is looking to consolidate its packaging business into newly formed San Miguel Food and Beverage Inc. (SMFBI) in the future.

SMC President and Chief Operating Officer Ramon S. Ang said SMFBI forms part of the first phase of the consolidation process of its investments. Aside from food and beverage, SMC also has investments in infrastructure, power, and fuel and oil sectors.

“Yung iba, in the future, may mga plano din,” Mr. Ang said, noting that its packaging business will also be merged with SMFBI in the following years.

SMC’s packaging unit San Miguel Yamamura Packaging Corp. has been ramping up expansion through the acquisition of bottling firms in Australia. Most recently, it bought Best Bottlers Pty. Ltd., a wine bottling and packaging facility in Victoria, Australia.

“Sana packaging isasama, kaya lang marami pang kailangang gawin to seek stockholder’s approval of so many small companies of packaging. Eventually we will and we can. The plan is to put it into (SMFBI) in the future,” he added.

Earlier this month, SMC said it is conducting a P336.5-billion share swap deal that would lead to the merger of its food and beverage businesses. SMC’s liquor and brewery businesses, through Ginebra San Miguel, Inc. and San Miguel Brewery, Inc., were transferred to San Miguel Pure Foods Company, Inc. Pure Foods later changed its name to SMFBI. 

Following this transaction, SMC plans to sell $3 billion worth of shares in SMFBI via a combination of private placement and follow-on offering. This comprises around 30% of shares of SMFBI’s shares, according to Mr. Ang.

“We received many offers to invest so we think we will sell the consolidated company. We’ll probably sell maybe 30% of the company, around $3 billion estimate,” he said.

The proceeds of the private placement will be used as equity for new businesses, according to Mr. Ang.

BREWERY BUSINESS
Mr. Ang said the company is scheduled to break ground for a brewery in Los Angeles, California in the next few months. The brewery, which will have a capacity of at least two million hectoliters per year, is valued at $150 million.

“Sa America, mabibili na ang lupa. Siguro in the next few months mag-ground break kami ng brewery dun na malaki (In America, we are buying the land. Maybe in the next few months, we can break ground for the big brewery),” he said.

As for its potential acquisition of a stake in Saigon Alcohol Beer and Beverages Corp., Mr. Ang said they are still assessing whether or not to go ahead with the plan, as the Vietnamese company is bidding out a stake of only 15% to 20%, as opposed to a controlling share.

“Minority shares, pero titignan pa rin natin. Baka naman mura, pero mahal ng valuation eh. (It’s for a minority share, but we will still look at it. Maybe it will be cheap, but the valuation is expensive),” he said. “I think they’re thinking of selling 15%, 20%.”

The diversified conglomerate generated a net income attributable to the parent of P20.89 billion in the first nine months of 2017, 19% lower than the P25.92 billion it booked in the same period in 2016. Revenues on the other hand increased by 19% to P596 billion during the period.

Shares in SMC added 40 centavos or 0.36% to close at P110 each at the stock exchange on Wednesday.

Sereno to House: Impeach me now

CHIEF JUSTICE Maria Lourdes P.A. Sereno in a statement on Wednesday, Nov. 22, urged the House committee on justice through her lawyers to expedite its proceedings and cause the immediate transmittal of the articles of impeachment to the Senate.

“It is our inclination to have the proceedings in the Committee expedited. If they (members) believe that the complainant has evidence then by all means prepare and file the articles of impeachment,” lawyer Alex Poblador told reporters in an interview on Wednesday, after the committee voted 30-4 to deny her motion seeking recognition of her right to counsel and cross-examination of complainant Lorenzo G. Gadon and other witnesses.

Mr. Poblador said this decision by the committee has rendered the presence of Ms. Sereno’s lawyers in the proceedings unnecessary.

“We have decided to leave because we can’t do anything,” he said.

“We look forward to have this case brought before the Senate and we are confident that we will be able to defend the Chief Justice there consistent with her constitutional rights,” he added.

Another lawyer and spokesman of Ms. Sereno also expressed her eagerness for her impeachment.

“The Chief Justice is eager to defend herself consistent with her rights and looks forward to her trial before the Senate, where she is hopeful her rights will be fully respected,” lawyer and spokesperson Josalee S. Deinla said.

Mr. Poblador, for his part, said Ms. Sereno will not resign and “fight this to the end.”

Ms. Sereno was upheld in the House vote by Representatives Jose Christopher Y. Belmonte of Quezon City, Ramon V.A. Rocamora of Siquijor, Kaka J. Bag-ao of Dinagat Island and Lawrence H. Fortun of Agusan del Norte.

The House panel also voted 30-3, denying the request of non-members of the committee to be allowed to participate in the discussions.

For his part, House Majority Leader Rodolfo C. Fariñas recalled the 2012 impeachment trial of Ms. Sereno’s predecessor, the late Renato C. Corona, saying that when Mr. Corona was impeached, he was not afforded a preliminary hearing at the House, because the complaint, signed by more than one-third of the House membership, was directly sent to the Senate for trial.

Mr. Fariñas, who served as one of the public prosecutors in the Corona impeachment, said he did not sign the complaint because “medyo masama ang pagkagawa [it was badly written].”

“In this present case, there were many who want to do it again (send the case directly to the Senate), but I dissuaded them. Let us go to investigation first. Ang nangyari, finile agad, nangangapa kami dun (What happened in the Corona case was that they filed it right away, so we ended up grappling with a weak case during trial),” he said.

“We whittled the allegations [against Corona] to two, and this is what will happen here if we are in a hurry. We want a polished articles of impeachment this time,” Mr. Fariñas said.

During the hearing, Mr. Gadon was made to present his allegations against Sereno. His complaint contained 27 alleged impeachable acts committed by the chief magistrate.

But several lawmakers grilled Mr. Gadon for not having personal knowledge on the issues he raised against the chief magistrate.

All told, Mr. Gadon himself came under fire after failing to provide a key document backing one allegation, and then citing a newspaper reporter as his “friend” and source to bolster his claim on the existence of such document — only to have the supposed source of the source, Associate Justice Teresita De Castro, denying she ever released any information or document.

Referring to Manila Times reporter Jomar Canlas, whom lawyer Lorenzo Gadon tagged as his source for validating information he received, Justice de Castro said in a statement to reporters, “I have never released to Jomar Canlas any information, report, or document regarding the work of the Court.”

Mr. Gadon had claimed that Ms. Sereno “committed a culpable violation of the Constitution when she falsified the temporary restraining order of the Supreme Court in G.R. No. 206844-45” (Coalition of Associations of Senior Citizens in the Philippines v. COMELEC). Ms. De Castro supposedly recommended the issuance of a TRO and sent a draft to Ms. Sereno’s office, but the final version that emerged from the CJ was vastly different.

Mr. Gadon said it was Mr. Canlas who gave him the “facts” about the incident, and that he also asked some employees of the Supreme Court about the internal matter.

Mr. Gadon acknowledged that the allegation was not based on personal knowledge, but rather, from a secondary source. But he said it was confirmed after he “investigated,” found “authentic records,” and learned that Ms. De Castro also confirmed the incident “to some other person.”

Asked by Mr. Fortun if he had authentic documents that could back his claim that falsification did occur, Mr. Gadon said it was not attached to his complaint, and that he did not have it in his possession.

He added, “The clerk of court failed to give it to me, saying it’s not available yet… She cannot yet find it.”

But, he said, “It can be confirmed by Justice De Castro.”

Mr. Canlas supposedly talked to Ms. De Castro, who told him that Ms. Sereno did change the TRO.

Mr. Gadon said he had another “friend” talking to Ms. De Castro in his behalf.

But the best person to shed light on the matter was Ms. De Castro herself, he said.

This was the first stumbling block to establishing the reliability of Mr. Gadon’s evidence, who had sworn that his is a verified impeachment complaint. This means he can raise authentic documents, or rely on personal knowledge, for each of his allegations against Ms. Sereno. — reports by interaksyon.com and Andrea Louise E. San Juan

BURI questions review of MRT contract in Singapore

By Janina S. Lim
Reporter

MRT-3 maintenance provider Busan Universal Railways, Inc. (BURI) said the government is suggesting to seek arbitration in a court in Singapore to review its contract which it recently terminated, a proposed tack the firm slammed as delaying negotiations toward a resolve.

Maricris B. Pahate, legal counsel of BURI, said the firm received the notice two days ago from the Office of the Solicitor-General (OSG) with the Department of Transportation (DoTr) citing “expertise” and “neutrality” as the main reasons why they opted for a court abroad.

“Hindi pa ba experts sa Philippine law ang arbitration natin? (Aren’t we experts enough on arbitration?) Our contract is governed by Philippine law. Why would you want Singapore to study Philippine law and Philippine contract law. Magaling naman arbitrators natin dito (Our arbitrators here are good),” Ms. Pahate told BusinessWorld on Wednesday in Quezon City.

She said the contract with the DoTr allows parties to seek arbitration from any court but has proposed that the case be elevated to the local arbitration office, the Philippine Dispute Resolution Center.

“Meron na tayong sariling rules of procedure. So di na tayo mahihirapan. Di madedelay yung process,” she added. (We already have our own rules of procedure. So we won’t have a hard time. The process will now be delayed.)

Ms. Pahate said BURI will reply to reject the government’s invitation, adding that having the proceedings in Singapore will be “mahal, malayo and illogical” (expensive, too far, and illogical).

“Either talagang pinapahirapan lang nila o dinedelay (Either they’re making it difficult or they’re delaying),” BURI Legal Counsel Perfecto A. Mercado said in an interview yesterday.

Sought for comment, DoTr Legal and Procurement Service Assistant Secretary Giovanni Z. Lopez said raising the concerns to the Singapore International Arbitration Centre (SIAC) will be “in the advantage of the parties…in view of the greater neutrality as the arbitration will be geographically removed from the Philippines and Korea, where the parties have substantial interests.”

“The technical expertise afforded by this option was also given weight by DoTr and OSG,” Mr. Lopez said in a mobile message yesterday.

Earlier this month, the DoTr terminated the maintenance contract held by BURI for MRT-3.

The Korean service provider has filed a motion for reconsideration and a protection order at a Quezon City Regional Trial Court ruling but said it has yet to receive a reply.

“We hope that we will be given relief immediately,” Ms. Pahate added.

BURI expressed hope that Transportation Secretary Arthur P. Tugade will take more time to mull over the consequences of terminating the contract with a backup transition team that may not be fit to temporarily takeover maintenance of the railway pending interested bidders to replace BURI.

“Tingin kasi namin wala sila din experience ng mga Koreans na na-train samin eh. Tanong niyo sila kung ano experience ng mga nagmemaintain,” Ms. Pahate said. (We think they don’t have the experience of the Koreans who trained us. Ask them what their experience is in maintenance.)

DoTr and BURI entered into a negotiated contract in January 2016, after a failed bid in the absence of interested parties.

Under the contract, BURI was to overhaul 43 light rail vehicles and replace the signaling system.

Duterte ends talks with Reds

By Rosemarie A. Zamora

THE GOVERNMENT of the Philippines on Wednesday, Nov. 22, announced the termination of talks with communist rebels.

The announcement came on the heels of President Rodrigo R. Duterte’s threats to classify the rebels as terrorists.

“We are hereby announcing today the cancellation of all planned meetings with the CPP/NPA/NDF in line with President Duterte’s directive that there will be no more peace talks with them,” Presidential Peace Adviser Jesus G. Dureza said on Wednesday, referring to the Communist Party of the Philippines, its armed wing the New People’s Army, and their umbrella organization the National Democratic Front.

“Recent tragic and violent incidents all over the country committed by the communist rebels left the President with no other choice but to arrive at this decision. We take guidance from the President’s recent announcements and declarations,” Mr. Dureza also said.

A fifth round of talks between the government and the rebels was cancelled last May following reported attacks on government troops by the NPA.

By September, Mr. Duterte said he was still willing to resume peace talks, urging the rebels to lay down their arms in exchange for jobs.

“President Duterte has taken unprecedented steps and has walked the so-called extra mile to bring peace. However, the Communist Party and its armed elements have not shown reciprocity,” Mr. Dureza said in a statement.

It was reported also recently that the NPA had ambushed a police car in Bukidnon province, killing a police officer and a four-month old infant in a vehicle that happened to be behind the patrol car.

Mr. Duterte, in an interview with reporters on Tuesday, said this incident prompted him to terminate the talks.

“Kung ganun kayo, tapos mag-giyera tayo, pati ’yung mga civilian idadamay natin, eh ’di ’wag na tayong mag-usap. It’s not an entity anymore worth talking to,” he said. (If you continue to do that and we engage in war, and the civilians are getting involved, it would be better if we don’t talk anymore.)

Asked about his planned proclamation on the rebels, Mr. Duterte said “it’s a legal thing that they have to craft,” referring to Executive Secretary Salvador C. Medialdea and Presidential Legal Counsel Salvador S. Panelo.

“There will be no peace negotiations anymore with the CPP/NPA/NDF until such time as the desired enabling environment conducive to a Change in the government’s position becomes evident,” Mr. Dureza said for his part.

Asked whether the government is set to release a formal notice of termination of talks, he said: “Let’s wait for events to unfold.”

But even with this announcement of the termination of talks, Mr. Dureza said they still “remain steadfast and undeterred in our (un)relenting journey for sustainable and just peace.”

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