How PSEi member stocks performed — March 5, 2018
Here’s a quick glance at how PSEi stocks fared on Monday, March 5, 2018.
Damosa Land pumping P2.5B to build more homes, condos
DAVAO CITY — Mindanao-headquartered property developer Damosa Land, Inc. (DLI) is investing about P2.5 billion to build the residential components of its existing and new projects within the next three years.
DLI Vice-President Ricardo F. Lagdameo said those projects include the construction of the fourth tower of the Seawind condominium complex in Davao City, houses at the mixed-use project in the Island Garden City of Samal, and at the Agriya township in Panabo City.
“We are having two major developments this year aside from our existing projects,” said Mr. Lagdameo in an interview last week.
DLI, the real estate arm of the Floirendo-owned Anflo Management and Investment Corp., will start the construction of the fourth phase of the six-building Seawind condominium in Davao within the year.
The company is aiming to finish the whole complex by 2020, a year before the initial target completion date.
For the 88-hectare Agriya in Panabo, Mr. Lagdameo said land preparation works have already started.
Macy P. Bibat, Agriya project development manager, said the 20-hectare residential component of the township would have houses and not condominiums.
“We are launching the residential component earlier than the third quarter (of the year),” said Ms. Bibat.
Residents, she noted, would have full access to the entire township, which would feature a working farm area showcasing the agricultural sector in the Davao Region and the rest of Mindanao.
Other Agriya features are a commercial area and a campus of the University of the Philippines Los Baños focusing on agricultural courses.
In the island of Samal, Mr. Lagdameo said they plan to launch within the next two months the residential component of the developer’s 12-hectare mixed-use complex called Bridgeport.
Pauline Anne B. Ferrero, Bridgeport project manager, said the complex would have both condominiums and lots for high-end single-detached houses as well as a commercial component and a marina.
The condominiums would be located in two spots, one near the beach while the other at the elevated side of the property.
Lots for the stand-alone houses would be at least 400 square meters each. — Carmelito Q. Francisco
DBM funds TRAIN cash transfers to mitigate inflation impact
By Melissa Luz T. Lopez
Senior Reporter
THE Department of Budget and Management (DBM) has released funding for cash transfers provided under the tax reform law, which will be given the poorest Filipino families to help them keep up with rising commodity prices.
In a statement, the DBM said IT transferred P24.49 billion to the Land Bank of the Philippines (Landbank) for distribution to the country’s 10 million poorest households, as part of the Tax Reform Cash Transfer Project (TRCT) administered by the Department of Social Welfare and Development.
Within the month, some P4.3 billion in cash will be transferred to the accounts of over 1.8 million families currently covered by the Pantawid Pamilyang Pilipino Program (4Ps), representing an additional P2,400 in their cash cards.
Signed into law as Republic Act 10963, the Tax Reform for Acceleration and Inclusion (TRAIN) law introduced additional taxes on fuel, cars, coal, sugar-sweetened drinks and a host of other items, which took effect Jan. 1.
Majority of Filipinos will also enjoy bigger disposable incomes under TRAIN, as it reduced the income tax rates for those earning below P2 million yearly. However, this does not include minimum wage workers as they were exempt from paying duties under the old tax regime.
The cash transfer represents a P200 monthly subsidy, which is intended to help the poor weather the inflationary conditions, with prices of basic goods and services rising by at least 4% year on year.
“The TRCT seeks to provide cash grants to poor households and individuals who may not benefit from the lower income tax rates but may be adversely affected by rising prices,” the DBM said.
Around 30% of the P82.3 billion in additional revenue generated by TRAIN will be spent on “social protection” programs, while the bulk of the collections will fund the government’s “Build, Build, Build” infrastructure agenda.
An additional 2.6 million families under the 4Ps program will also receive a top-up in the cash transfer which they receive in March, but they will be receiving it through other cash agents as they do not hold Landbank cards.
Meanwhile, three million senior citizens who are receiving social pensions are expected to get the cash transfers between April and May.
Some 2.6 million poor households who will be first-time beneficiaries of the government’s cash transfers scheme will be given a year’s worth of benefits by August, the DBM said.
The cash grants will eventually be increased to P3,600 for the years 2019 and 2020 or P300 per month. The distribution schedule will likewise be adjusted to the first quarter of the year as the system is put in place.
The government is looking to reduce poverty incidence to 14% by 2022, while spurring economic growth to as fast as 7-8%.
BoI-approved projects surge to P131.6B as of Feb.
THE VALUE of projects approved by the Board of Investments (BoI) in the first two months of the year rose sharply to P131.6 billion, with many investment applications related to the government’s ambitious infrastructure program.
In a statement, the BoI said on Monday that approved projects in the two months to February were worth significantly more than the P23 billion a year earlier.
Power projects approved for investment incentives by the BoI accounted for P87.7 billion; water supply, sewerage and waste management projects, P13.8 billion; and manufacturing projects, P12.7 billion.
The remaining P17.3 billion involved projects from other sectors such as transport. Among these were Mabuhay Maritime Express Transport, Inc.’s P602-million high-speed ferry which will operate between Kalibo, Aklan and Boracay.
Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo noted that more projects were registered in the power, cement and air transport sectors.
Among these were Solar Philippine Commercial Rooftop Projects, Inc.’s five solar-power projects worth at least P60 billion in total. These facilities are expected to reduce reliance on fossil fuels and help bring down the overall cost of power.
Meanwhile, Ionic Cementworks Industries, Inc. is set to put up a P12-billion cement plant in Pagbilao, Quezon.
Trade Secretary and BoI Chairman Ramon M. Lopez said “sound policies” and “strong investor sentiment” are driving the economy’s momentum, with the agency ahead of the pace in meeting its P680-billion investment target.
“There were so many prospects late last year that after seeing the unprecedented growth, they finally decided to roll out new investments and other firms remain bullish with their expansion to take advantage of the expansive economy,” Mr. Lopez added.
Central Luzon accounted for P61 billion of the total in the first two months, up from P1.2 billion a year earlier.
Calabarzon had P45.8 billion while the Davao Region came in third at P13.8 billion.
Investments for the National Capital Region fell 36% year-on-year to P2.47 billion from P3.87 billion a year earlier, reflecting the government’s policy of encouraging more investment in the countryside. — Janina C. Lim
Agri dep’t to establish more outlets to sell rice direct from farmers
THE Department of Agriculture (DA) said it will set up more stations offering rice direct from farmers this month, beginning in Quezon City, in order to reassure the public amid fears of rising prices for the commodity.
Agriculture Secretary Emmanuel F. Piñol told reporters during the launch of the Rolling TienDA — an outlet for selling agricultural products, including those from fisherfolk — in Payatas, Quezon City that selling goods directly from farmers to consumers will demonstrate that food supplies are ample and fairly priced if middlemen are cut out.
“We would like to prove to everybody that food does not need to be that expensive. There is food. The only problem is that it’s controlled by middlemen and the food supply chain so they earn more. We’re not trying to dismantle that system but we’re trying to offer to the people an alternative,” he added.
Payatas is the second site selected for the Rolling TienDA, serving around 1,500 families. The first rolling TienDA site was set up beside the entrance of the DA compound, selling commercial rice from southwestern Luzon at P38 per kilo.
“Initially, we wanted to put it in Tondo but the Congressman [from that jurisdiction] said that the price might be too high [because] this isn’t subsidized by the government. I think P38 is a fair price for Metro Manila,” Mr. Piñol said.
“We cannot promise them anything lower than P38 for Metro Manila. For the provinces, maybe, it can be lower. It depends on the prices in the local market. The ideal price of the rice should be twice the buying price of the palay. “
The DA and the Quezon City government agreed to set up more sites in the city.
In the Visayas, the DA will set up its first Bigas ng Masa outlet in Bago, Negros Occidental, the location of a P40-million rice processing complex which started operations last year.
“[W]e’ll be using their large rice complex and a cooperative will operate it. We have given them (the cooperative) P20 million in capital and then another production loan worth P20 million,” he added.
“[Once] the palay that they buy goes through the drying facility we will open TienDA outlets in every town in Negros Occidental.”
Apart from direct sales of rice, the DA also plans to sell other basics such as fish, after the fishing ban in the Zamboanga region was lifted last week. Mr. Piñol said that the DA will be making use of an 80-meter boat with refrigerated storage to transport seafood for sale in various TienDA sites.
While the National Food Authority awaits the arrival of the 250,000 metric tons of imported rice to replenish its stocks, Mr. Pinnol said Bigas ng Masa can serve to reassure the public about the staple’s availability at fair prices.
Mr. Piñol reiterated that the Philippines is on track to achieve rice self-sufficiency by 2020, with the current mismatch between supply and demand at about 400,000 metric tons. Assuming favorable weather until next year, Mr. Piñol said that rice sufficiency levels could be at 97% by 2019. — Anna Gabriela A. Mogato
Mindanao mom-and-pop bakeries face stiffer competition from food brands
By Carmencita A. Carillo
Correspondent
DAVAO CITY — Micro, small and medium-scale enterprise (MSME) bread and cake makers are a growing sector in Mindanao, but they need to keep innovating to compete with big firms that mass-produce baked goods, according to the chairman of the Filipino-Chinese Bakery Association, Inc.
“I was here 19 years ago to escort a chef from California Raisin and we travelled to (the cities of) Cagayan de Oro, Davao, and it turns out the city has changed a lot since then,” Bien Enrico C. Ah, chairman and also a past president of the Filipino-Chinese Bakery Association, said in an interview during the Bakery Fair 2018-Davao held at the SMX Convention from March 1-3.
“The bakeries here are no longer mom-and-pop operations so they must prepare to become competitive,” Mr. Ah said, “We buyers of flour have to be more innovative since our mainstream products are being taken over by the big flour companies.”
He cited Universal Robina Corp., one of the country’s biggest food and beverage companies, which has established the Baker John Bread line, and several local bakery companies that are forming partnerships with foreign firms such as Monde Nissin.
A total of 76 companies participated in the Bakery Fair, the first in Mindanao, including those in the general food service business.
More than 4,000 visitors from around Mindanao attended, and while this is much less than the 25,000 visitors during the Bakery Fair in Manila last year, Mr. Ah said it was more than expected.
He said previous proposals to hold the Bakery Fair in Mindanao were “shot down three times due to martial law.”
“My (association) directors were very conservative but I was firm with my decision,” he said, adding that majority of the exhibitors were supporting him.
Cecil A. dela Cruz, president of the Davao Bakers Club, which has around 30 members from around Mindanao, said the sector faces challenges but welcomed the fair.
She said the club’s individual members, and the club as a group, stand to benefit from the new products and technology featured during the event.
“The industry is growing and expanding, but we don’t consider our members as competition, but instead we get together to help each other out,” Ms. Dela Cruz said.
“You can’t bake with recipes alone, you also need ingredients and technology,” she added.
Hannah C. Granado, Mindanao Cake Decorating Society (MCDS) president, also said that the baking business in Mindanao is growing, although most of the players are still home-based.
MCDS now has over 2,400 members, but only a small percentage have physical stores.
The majority, she said, rely on online marketing using social media platforms.
“A lot of home bakers do not have business permits and while we cannot force them to get a permit due to the expenses involved, we want to educate them on the hygiene and safety (measures) of baking,” Ms. Granado said.
Mr. Ah said Mindanao’s bakers must take advantage of the boom by keeping abreast of new developments in the industry and investing in good equipment. “The locals have to be ready.”
Counterfeit goods seizures reach P8.2B in 2017
AUTHORITIES confiscated at least P8.2 billion worth of counterfeit and pirated goods in 2017, the biggest such seizures since 2014, the Intellectual Property Office of the Philippines (IPOPHL) said.
The multi-agency National Committee on Intellectual Property Rights (NCIPR), which provided the estimates, said seizure values rose 26% in 2017, with the Bureau of Customs accounting for P5.8 billion, representing 70% of the total.
Electronics, optical media, and pharmaceuticals and personal care products were the most common items seized, indicating a shift from previous years.
In 2016, jewelry and watches, followed by cigarettes and alcohol and optical media, respectively, made up the bulk of counterfeited items.
Watches and jewelry also topped 2015 seizures, with optical media second followed by handbags and wallets. In 2014, the top three categories were apparel and accessories; handbags and wallets; and footwear.
“As this reflects the growing market demand for electronic goods and products involving public health and safety, we warn the public to be wary of counterfeiters exploiting this high demand,” IPOPHL Director General Josephine R. Santiago said in a statement on Monday.
Based on the data from the Philippine National Police and the National Bureau of Investigation, both NCIPR members, a total of 309 search warrants were implemented. Customs issued 16 warrants of seizure and detention during the period. The Optical Media Board, also a member, conducted 2,770 inspections in 2017.
IPOPHL is tasked to administer the intellectual property (IP) system while pursuing violators of IP rights.
It sits as vice-chair of the 12-member NCIPR with the Department of Trade and Industry as chair. It was created in 2008 by president Gloria Macapagal-Arroyo through Executive Order 736. — Janina C. Lim
CEZA fields logistics-hub bid for northern Luzon airport
THE Cagayan Economic Zone Authority (CEZA) said it has received an unsolicited proposal to convert the Cagayan North International Airport (CNIA) into a logistics aviation hub.
The proponent, a consortium known as the Cagayan Business Aviation Center, consists of the Subic Bay Business Aviation Center — formerly the AIA International Flight Support and Services — and US-based National Standard Finance and Thailand’s Mahanakon Partners Group., Co., Ltd.
CEZA said the proposal covers aviation services, a maintenance, repair and overhaul facility; an airline crew training center; and facilities for a general aviation or regional corporate jet charter service and an inter-island commuter airline service.
The consortium hopes to make CNIA a one-stop aviation hub “with interdependent revenue generating assets to meet the demands of the aviation industry.”
“This proposed high-tech airport facility will be the first of its kind in the country and will comprise interdependent projects using state-of-the-art aerospace technology,” Raul L. Lambino, administrator and CEO of the CEZA said in a statement on Monday.
The agency also signed a memorandum of understanding with Malaysian companies Iris Corp. Bhd. and Positive Paragon Sdn. Bhd., which are offering airport management services for CNIA.
The Malaysian companies proposed to set up electronic systems like work stations, passport and travel card readers and e-gates, among others.
CNIA is scheduled to receive its first overseas commercial aircraft from Macau in a few weeks. Mr. Lambino also noted that domestic airline Cebu Pacific is set launch a service between Manila and Lal-lo, Cagayan soon.
The CNIA in Lal-lo has fulfilled the requirements for an aerodrome certification from the Civil Aviation Authority of the Philippines. This will allow the airport to operate commercial flights from the most common types of single-aisle commercial aircraft like the Airbus A320 and the Boeing 737. — Janina C. Lim
LTFRB resumes application processing for ride-share drivers
THE Land Transportation Franchising and Regulatory Board (LTFRB) said it reopened applications for drivers of ride-sharing services.
The agency resumed processing of applications, which it suspended in July to resolve issues with the operations of transport network companies (TNCs).
Board Member Aileen Lourdes A. Lizada said the board hit the cap of 300 applications yesterday, with discussions ongoing with the TNCs to increase the number.
“For the first day, we are happy with the flow. It was orderly, majority of the applicants had complete requirements,” Ms Lizada told reporters in a message.
Uber Philippines (Uber Systems, Inc.) head of government relations and public policy Yves Gonzalez, said the company expects around 20,000-25,000 applications.
“We anticipate around 20,000 to 25,000 applications which we will process during this three-month period,” Mr. Gonzalez said in a briefing.
The LTFRB increased to 65,000 its common supply base for transport network vehicle services (TNVS) in Metro Manila (from 45,000), 1,500 in Metro Cebu (from 500), and 250 in Pampanga (from 200). There are about 59,000 active TNVS drivers.
Drivers apply to the LTFRB for certificates of public convenience (CPCs) or in some cases provisional authority (PA). — Patrizia Paola C. Marcelo
‘Tap on a keyboard and make a living’
According to the October 2000 Awake! magazine article, “Is It Wise to Invest in the Stock Market?,” “the apparent ease of trading stocks online and gaining access to information previously reserved for brokers and professional traders has prompted many individual investors to take up day trading, the buying, and selling of stocks full-time. Some have given up lucrative careers to become day traders.” The article adds, “one 35-year-old man who quit his $200,000-a-year job to trade stocks is quoted as saying: ‘How else can you have no inventory and no employees, pay no rent, tap-tap-tap on a keyboard and make a living?’”
Investor interest in stock trading has modernized and gradually taken on a new face with the introduction of virtual currencies (VCs). Reports and blogs on the benefits and risks of VCs have saturated the internet and captured the attention of private entities, as well as government regulators.
None other than the Bangko Sentral ng Pilipinas (BSP) acknowledges that VC systems have the potential to revolutionize the delivery of financial services, particularly for payments and remittance, in view of their ability to provide faster and more economical transfer of fund both for domestic and international transactions. These benefits, however, should be considered along with its risks: a higher degree of anonymity, speed of transactions, volatility of prices, and global accessibility. According to the BSP, VCs pose money laundering and terrorist financing risks, information technology risks, and consumer protection and financial stability concerns, among others.
These developments prompted the BSP to issue Circular No. 944-17, providing the guidelines for VC exchanges. The BSP does not intend to endorse any VC — such as Bitcoin — as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly for payments and remittances, which have a material impact on anti-money laundering (AML) and combating the financing of terrorism, consumer protection, and financial stability.
Under the Circular, a VC refers to any type of digital unit used as a medium of exchange or a form of digitally stored value created by agreement within the community of VC users. VCs are neither issued nor guaranteed by any jurisdiction and do not have legal tender status. On the other hand, a VC exchange refers to any entity that offers services or engages in activities that provide a facility for converting or exchanging fiat currency (i.e., legal tender issued and backed by governments) to VC or vice versa.
A VC exchange shall obtain a Certificate of Registration (CoR) to operate as a remittance and transfer company and shall adhere to the BSP’s registration procedures. An exchange is required to submit the Application for Registration and Notarized Deeds of Undertaking through the appropriate department of the Supervision and Examination Sector (SES). The provisions on the issuance of BSP CoR, the accreditation of remittance sub-agents, registration with the AML Council Secretariat, and mandatory training shall also apply to VC exchanges.
Due to investors’ heightened curiosity, the Securities and Exchange Commission (SEC) has issued advisories reminding the public to take necessary precautions in dealing with VCs and initial coin offerings (ICOs). An ICO is the first sale and issuance of a new VC to the public, usually for the purpose of raising capital for start-up companies or funding independent projects.
Based on the advisories, some of the new VCs follow the nature of security, which includes an investment contract, as defined in the Securities Regulations Code (SRC). An investment contract is presumed to exist whenever a person seeks to use the money or property of others on the promise of profits.
When a VC is, likewise, analogous to any of the types of securities under the SRC, there is a strong possibility that the said VC is a security under the jurisdiction of the SEC and has to be registered and necessary disclosures have to be made to protect the investing public. Likewise, those who act as salesmen, brokers, dealers, or agents of ICO entities must be registered with the SEC.
The SEC has yet to issue a formal regulation for VCs. The Bureau of Internal Revenue (BIR), on the other hand, is always on the lookout.
There are BIR issuances governing the treatment of certain online dealings. Revenue Memorandum Circular (RMC) No. 055-2013 reiterates the taxpayers’ obligations in relation to online business transactions, including online retailing through virtual shopping malls, online marketplaces, web stores, and similar Web sites.
A circular that has to do with the use of certain mobile apps is RMC No. 070-15. It echoes the tax incidence of persons engaged in land transportation, particularly transport network companies (TNCs) like Uber, Grab, their partners/suppliers, and similar arrangements. A TNC is a pool of land transportation vehicles whose accessibility to the riding public is facilitated through the use of a common point of contact, which may be in the form of text, telephone and/or cellular calls, e-mail, mobile applications, or by other means.
These RMCs set a precedent that the BIR takes a keen interest in online activities, especially if it gives rise to a taxable transaction. The absence of an SEC and BSP blessing to VCs and VC exchanges does not stop the tax office from issuing any regulation concerning their tax treatment.
Following the initial BSP classification that VC exchanges could be considered engaged in the business of payment and remittance, such entities will be generally subject to a full range of taxes, such income, value-added, and documentary stamp taxes. Interestingly, within five years of the effectivity of the Tax Reform Acceleration and Inclusion (TRAIN) law on Jan. 1, taxpayers engaged in e-commerce are required to issue electronic receipts or sales invoices.
Individual traders, on the other hand, are obliged to report any income derived from such activities for income tax purposes. This is subject to the situs rules on online transactions, as may be clarified by the tax office.
This author, of course, does not intend to dissuade anyone from investing in this kind of business, if caution is exercised. Just like any other investment, doing a cost-benefit analysis is highly recommended, since it involves hard-earned income.
The article mentioned at the beginning of this article noted: “How a person chooses to invest his money is a personal decision. Guided by a sound mind and contentment with the necessities of life, an investor does well to keep financial concerns in their place, not neglecting his or her family responsibilities and spiritual needs.”
Renato R. Balisacan, Jr. is a manager of the Tax Advisory and Compliance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.
The promise of change always turns into restoration and preservation
“For one brief shining moment Filipinos from all walks of life set aside their walls of division and came together for a common purpose to open the doors to real change, ‘tunay na pagbabago.’ Unfortunately, we quickly lost sight of our goal when traditional politics re-emerged from the shadows to dominate our lives to this day. EDSA was about a heaven-sent golden opportunity to change our ‘ugali’ (character) — our attitudes and behavior such as apathy and gross negligence.”
Raffy Alunan, my fellow writer of this column, wrote this in this space last week.
Cory Aquino, who led the triumph of People Power on EDSA, is much to blame for that loss of opportunity for real change. Just a year after People Power chased the tyrannical and insatiably greedy Conjugal Dictatorship out of the country, she allowed remnants of the dictatorship to sneak their way back into positions of power. As the UP professor of Sociology Randy David wrote in the Philippine Daily Inquirer on the 32nd Anniversary of the EDSA event:
“The people who poured into EDSA brought with them their hopes for a country free from tyranny and corruption, and from degrading poverty and glaring social inequality. Though they were not sure how Cory would fare as a leader, their faith in the future was unshakeable.
“Because the unforeseen events at EDSA portended a new beginning, we all felt confident to call it a revolution….
“Threatened by repeated coup attempts, Cory turned more and more to the United States and to the business and political elites for the support she needed. The popular, if largely unorganized, sectors that campaigned for her in the snap election and bravely faced the tanks at EDSA gradually fell to the side. The revolution that began with so much promise quickly turned into a restoration, giving birth to a political system grossly out of sync with the progressive intentions of the nation’s own Constitution.”
In 1987, the people elected Juan Ponce Enrile, Joseph Estrada, and Edgardo Angara, accessories all of the Marcos regime, to the Senate. Angara was nominated by president Cory herself. She enlisted the services of men and women who served under Marcos or who connived in the plunder of the country’s coffers.
Senior partners of a law firm that drew up the contract for an aborted project that cost the Filipino people $500,000 a day played key roles in her government. She appointed to the Philippine Commission on Good Government a cousin of Marcos crony Roberto Benedicto. Subsequently, she named as chair of PCGG (Presidential Commission on Good Government) a man who lawyered for Marcos crony Jose Campos. She designated as Ombudsman a lawyer of Marcos crony Emilio Yap. At one time, those directly involved with the recovery of ill-gotten wealth — the secretary of Justice, the chairman of the PCGG, and the ombudsman — were former lawyers of the biggest cronies.
A member of her Cabinet who could not account for P10 million and who was accused by the Senate Blue Ribbon committee of violating the law for collecting double compensation, not only remained in office but was given the place of honor in Cabinet meetings, the seat at her right-hand side. She named as the country’s representative in the Asian Development Bank a Cabinet member who was accused of pressuring government financial institutions to grant a P1-billion loan to a new company with small capital in which his son was a major investor. She transferred to a sinecure job in Malacañang a government administrator who could not explain the loss of P17 million worth of palay. She named as ambassador to a Western European country the head of a bureau against whom the Senate Blue Ribbon Committee had recommended the filing of graft charges. If there were cronies during Marcos’s martial law rule, there was Kamag-anak, Inc. during Cory’s presidency. Two law firms during martial law were said to be “walang talo” because their founding partners were close to Marcos. During Cory’s time, a law firm gained the same reputation because it was headed by a close relative of hers. When the highly respected chair of the Securities and Exchange Commission (SEC), Julio Sulit, filed criminal charges against a foreign company for violating corporation laws, the company immediately hired that law firm. In no time at all, the case was closed. The charges were not dismissed by the judge but were withdrawn by the prosecutor for “lack of evidence” — when evidences were submitted by the SEC chair himself.
So, three years into Cory’s presidency, Jaime Cardinal Sin, who turned the tide of battle at EDSA on the evening of Feb. 22, 1986, expressed his sentiments, saying, “Too many have not learned the lessons of sobra na, tama na [enough is enough]. We have gone back to what we really are, a nation of easy-going people, rascals, mayayabang (conceited), and thieves. No day goes by without newspaper reports of corruption, people we elected to office piling up Uzis, Galils, and luxury cars.”
Cory’s own National Security Adviser, Rafael Ileto, the general who opposed the imposition of martial law and retired prematurely from military service to evade executing martial law, spoke of unabated graft and corruption, the involvement of military and law enforcement officers in the commission of crimes, and the shameful display of extravagance and insensitivity to public opinion by some government officials.
At president Cory’s conferment of the Legion of Honor, degree of Commander, on him, Chino Roces, the organizer of the “One Million Signatures” campaign urging Cory to run for president, could not hold himself back from expressing his disappointment at the president. His startling response to the honor just bestowed upon him by the president was this admonition:
“Please allow me to remind you first that our people brought a new government to power because our people felt an urgent need for change. That change was nothing more and nothing less than that moving quickly into a new moral order. The people believed that when we said we would be the exact opposite of Marcos, we would be just that. Because of that promise which people believed, our triumph over Marcos was anchored on the principle of morality. And that for our people was and is the bottom line. It was not rice, roads, bridges, water, electricity, and such other mundane things that people expected of us, it was and much more: a moral order led by you, Cory.”
On the occasion of the launch of the National Coalition for Transparency in June 1989, she said: Marcos and his cronies are not just symbols of the past but the reality of the present. We live and suffer the consequences of the corruption that Marcos institutionalized in every level of government, civilian or military. I intend to address not only the people’s dismay over corruption but their despair over inaction. Too much depends on the success of this venture. For what is at stake here is the people’s continuing faith in democracy, in the force of moral values and law. The campaign against corruption will succeed only when society, moved in its moral core, will no longer have anything to do with it, and wealth by itself can no longer buy our respect or a welcome in our home.”
Yet she allowed the Marcoses to buy back respect and welcome with the very wealth stolen from the people. Her own appointee to the PCGG chair, David Castro, admitted publicly that evidence against the Marcoses cannot be admissible before the courts. That was practically saying the Marcoses can keep all their ill-gotten wealth because there is no evidence it was ill-gotten.
And so came home pompously from self-exile Bongbong Marcos, his mother Imelda, and Eduardo Cojuangco to reclaim their sequestered assets and their positions of prominence in Philippine society. She ordered the Philippine flag flown at half-mast when Ferdinand Marcos died.
The Filipino ugali that Raffy and all Manindigan! members had hoped would be changed when they campaigned for Cory in the snap election and bravely faced the tanks at EDSA, persisted through the Fidel Ramos, Joseph Estrada, Gloria Arroyo, and Noynoy Aquino presidencies. That is why, when a candidate in the presidential election of 2016 promised “change is coming,” a third of the voting population elected him president even if he was just the mayor of a city at the southern tip of the Philippine archipelago.
Sadly, as in 1986, the promise of change in 2016 turned not only into the restoration of the Marcoses to positions of influence, but into preservation of our ugali — our attitudes and behavior of apathy and gross negligence. In the time of president Cory, the Marcos influence was controlled. In this time of President Rody, the Marcos influence is pervasive. The people’s apathy towards this development shows clearly that the ugly ugali of the Filipino is very much ingrained.
Oscar P. Lagman, Jr. is a member of Manindigan! a cause-oriented group of businessmen, professionals, and academics.
The Corporate Governance System for the GOCC sector compared with that for PHCs
The GOCC (government-owned and controlled corporation) Governance Act formally defines “Board of Directors/Trustees” as “the governing body that exercises the corporate powers of a GOCC.” Meanwhile, the GOCC Code of Corporate Governance (CG) formally distinguishes between the Board of Directors/Trustees and Management thus:
“Board of Directors/Trustees” or “Board” or “Governing Board” (Board) refers to the collegial body that exercises the corporate powers, conducts all business, and controls or holds all properties of a GOCC, whether it be formally referred to as the “Board of Directors” or “Board of Trustees” or some other term in its Charter, Articles of Incorporation or bylaws.
“Management” refers to the body given the authority to implement the policies determined by the Board in directing the course and business activities of the GOCC.
The following discussions will compare Board structures in the GOCC sector with those existing in the PHCs (publicly held companies), and discuss the impact they have on corporate governance.
BOARD COMPOSITION: APPOINTIVE AND EX-OFFICIO DIRECTORS
The most ubiquitous feature in the composition of GOCC Governing Boards is the presence of “Ex-Officio Directors” who are designated government officials who sit or act as members of the GOCC Boards of Directors/Trustees by virtue of their title in another public office, and without further warrant or appointment, as distinguished from “Appointive Directors” who are appointed to the Board under the process mandated under the GOCC Governance Act.
More often than not, the charters of GOCCs provide that the Ex-Officio Directors would be the cabinet secretaries whose department exercises supervision over the GOCCs. Ex-Officio Directors therefore often would have to sit on several GOCC Boards; they simply do not have the time to attend all the Board meetings, and often send their undersecretaries or directors as their alternates to attend to their duties in the GOCCs to which they have been designated as directors. The designation of alternates is specifically allowed under the Act, which is, by itself, a practice that is not allowed for PHCs under the Corporation Code, which does not allow directors or trustees to designate a proxy for Board meetings or in the exercise of voting power.
The system of alternates is a recognition that the designated Ex-Officio Directors are often high public officials whose main responsibilities do not allow them the opportunity to devote sufficient time to their ancillary responsibilities as directors of GOCCs. Their alternates are often themselves too occupied with their own tasks and responsibilities in the department or agencies where they serve and often attend Board meetings as merely passive members. In GOCC Boards where the majority of the members of the Governing Board are Ex-Officio Directors — such as the Manila International Airport Authority — it really takes some effort for the Board to arrive at important decisions, since the alternates cannot really make decisions on issues presented before them without formal authority from the principals they represent.
The system of Ex-Officio Directors in the GOCC sector may represent the weakest link in public corporate governance in areas of responsibility and accountability in that Ex-Officio Directors assume their positions on GOCC Governing Boards merely as an adjunct to their primary obligations to the agency or department to which they have been appointed; they are able to pass on their directorship responsibilities to alternates who serve under them who are not really in a position to exercise the business judgment required of directors, and who are themselves are often saddled with primary tasks and programs in the government agencies or departments to which they have been appointed; and that since such directors remain on the Board by reason of their primary public office, there are not bound by the “merit system” required of Appointive Directors to be re-appointed or to remain on the Board.
On the other hand, since most of the Ex-Officio Directors in the GOCC sector are Department Secretaries, they would often represent the “political side” in GOCC Governing Boards. This is understandable since department secretaries are the alter ego of the President of the Republic, who is inherently the “No. 1 politician” of the land — it is politics or the management of political affairs of the country that primarily got the President elected to head the Executive Department of the Government, and GOCCs fall within the executive branch of the Government. Therefore, all GOCCs, including the purely commercial ones, do not have the maximization of profits as their primary objective, but rather how their commercial nature can be pursued to serve the particular public interests they were organized to achieve — which is the very end that politics seeks to achieve.
The system of Ex-Officio Directors in the GOCC sector therefore seeks to assure that the GOCCs are operated in accordance with the President’s agenda which is often expressed in the Philippine Development Plan (PDP) approved on a five-year basis by the National Economic Development Authority (NEDA), which is headed by no less than the President himself.
It is for the foregoing reasons (as well as the discussions of the merits of the Appointive Directors system which follows below) that in order to improve the governance structure in the GOCC sector, the Ex-Officio Directors should always be a minority on the GOCC Governing Board — say, at most 30% of the entire Board, an optimal size that allows the National Government’s priority programs to be considered in board meetings, but not too large as to prevent quorums from being achieved due to the inability of such directors to be present when pressed by other national concerns, or to undermine the required votes necessary for the pursuit of corporate plans and programs evolved by a Governing Board the majority of whom are Appointive Directors.
On the other hand, by reason of the constitutional rules against multiple positions in government, all Appointive Directors in the GOCC sector must come from the private sector. Nonetheless, these Appointive Directors are different from directors in PHCs in that they are appointed to the Governing Boards by the President of the Philippines from a shortlist submitted by the GCG (Governance Commission for GOCCs), unlike in PHCs where the directors are elected at stockholders’ meeting called for the purpose. This singular process alone makes all Appointive Directors assume the role of “public officials,” in much the same manner as Ex-Officio Directors are first and foremost public officials designated to sit on the Governing Boards of GOCCs.
Although they assume their positions as public officials, Appointive Directors as mandated to represent “private sector CG values,” and are expected to serve with a deep sense of “professionalism” rather than considering themselves as “political appointees.” The entire system of public CG mandated under the GOCC Governance Act is meant to ensure that the members of GOCC Governing Boards are able to achieve such dual roles.
The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.
Cesar L. Villanueva is the Vice-Chair of the CG Committee of the Management Association of the Philippines (MAP), the former Chair of the Governance Commission for GOCCs and the Founding Partner of the Villanueva Gabionza & Dy Law Offices.