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SEC: Updates and innovation

Taxwise Or Otherwise — By Cyril B. Pestilos

To acquire juridical personality, a partnership and a corporation must register first with the Securities and Exchange Commission (SEC) before registering with the Bureau of Internal Revenue, the Local Government Unit having jurisdiction over the place where the entity intends to operate and locate, and the mandated social agencies such as the Social Security System, Pag-IBIG and PhilHealth.

Once registered, companies are enjoined to comply with various requirements. For instance, every amendment to the Articles of Partnership or Incorporation and the By-laws must be filed with the SEC. During the course of business operations, corporate entities may also find themselves needing to file a request for opinion to secure confirmation or a ruling from the SEC on issues affecting their rights and interests. Likewise, the Certificate of Good Standing, which has come to be a popular requirement of other government offices nowadays, may be needed to establish proof of compliance with reportorial requirements of the SEC.

On top of the annual reporting requirements, the foregoing transactions suggest why agents or representatives of partnerships and corporations need to ensure that they are up to date in regard to SEC compliance requirements and policy changes.

For those unaware, the SEC head office is no longer located at the intersection of EDSA and Ortigas Avenue. It is now at the Secretariat Building, PICC Complex, Roxas Boulevard, Pasay City. Apart from the change in location, other changes recently adopted by the SEC are, as follows:

1. Downloadable Stock and Transfer Book (STB) and Membership Book (MB).
As you may know, the STB for stock corporations and MB for non-stock corporations must be registered with the SEC within 30 calendar days from the issuance of the Certificate of Incorporation. Pursuant to SEC Resolution No. 546, series of 2016, the STB and MB are now downloadable from the SEC website.

Unlike manual books of account, which are readily available at your local bookstore or office supplies shop, STBs/MBs seem only available at the SEC offices. Although it may appear that the SEC has a monopoly over the issuance of these books, the limited demand and its regulated purpose may have curbed other printing press companies from retailing them on the market. Fortunately, they are now readily downloadable.

Based on the SEC Resolution, the downloaded STB and MB are registrable only at the SEC Satellite Offices located in: 1) Ali Mall, Cubao, Quezon City; 2) SM North, Quezon City; 3) Robinson’s Galleria, Ortigas Avenue, Quezon City; and 4) SM Manila, City of Manila. The STB is composed of 60 pages, excluding the first page as the registration page, while the MB is composed of 30 pages, excluding its registration page. Just like its hardbound counterpart, each page of the downloadable STB or MB must be certified correct by the Corporate Secretary.

2. New SEC consolidated schedule of fees and charges
As approved by the Department of Finance, the SEC has issued Memorandum Circular (MC) No. 03 series of 2017 dated March 7, 2017 to publish the full text of the “Consolidated Schedule of Fees and Charges” to be imposed and collected by the SEC.

Under the new schedule, the name reservation fee is now P100 per allowable name for 30 days.

While there is an apparent additional cost to the transacting public, the increase is only fair considering that the SEC took more than two decades to modify its fees. Moreover, not all transaction fees were increased.

3. Update on General Information Sheet (GIS) and Notification Update Form (NUF)
Under SEC MCs Nos. 14 and 16, series of 2016, revised templates of the GIS and NUF have been issued. Both can be downloaded from the SEC website. The GIS must be filed annually within 30 calendar days after the actual general annual meeting of the stockholders/members or after the anniversary date of the issuance of the SEC license while the NUF must be filed within 30 calendar days from the occurrence of the reportable change.

Markedly, the new GIS and NUF now have separate pages where the Tax Identification Numbers (TIN) and addresses of the Board of Directors/Trustees, Officers, Stockholders and Resident Agent have to be indicated. However, the separate sheet designated as the TIN Page will not be uploaded for public viewing in the SEC i-View (the Commission’s online database that is accessible to the public for a fee).

Further, the Corporate Secretary’s Certification has been revised to include, among others, the stipulation that failure to file the GIS for five consecutive years shall be construed as non-operation of the corporation, which is a ground for revocation, with the corporation considered as waiving its right to a hearing for the said revocation.

4. Reduced requirements for financing and lending companies
Part of the reform initiatives of the SEC to ease doing business in the Philippines is to modify the Application Form, Company Information Sheet and Personal Information Sheet, which are documents required by the Company Registration and Monitoring Department (CRMD) in securing a Certificate of Authority to Operate as a Financing Company/Lending Company. Likewise, the Treasurer’s Affidavit for this particular industry has been revised. The purpose of these modifications is to consolidate some of the documentary requirements and minimize redundancies in the elicited information.

Further, the CRMD dispensed with the following requirements: (1) local police clearance; (2) certificate of good moral character; (3) work permit from the Department of Labor and Employment for foreign directors and officers; and (4) location map and copy of the lease contract or title of the building/unit where the company intends to locate or is located.

However, there is an additional requirement of submitting a valid clearance from the National Bureau of Investigation (NBI clearance) for all incorporators and stockholders, regardless of nationality. The NBI clearance was previously required only from Filipino incorporators and stockholders, and from foreign directors and officers.

With the recently introduced changes, the SEC has turned a page on its institutional landscape by adapting to the demands and trends of the times. To stay on the path of competitiveness, the government must embrace change as its mantra for development. If the Philippines intends to engage the new world order of connectivity, it must define its framework for change. After all, innovation is the key to the future.

The views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from the article.

Cyril B. Pestilos is a Senior Consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 845-2728

cyril.b.pestilos@ph.pwc.com

Economic team seeks urgent status for rice tariff bill to replace QR

THE GOVERNMENT’S economic managers will ask the President to certify as urgent the bill on lifting quantitative import restrictions on rice, replacing it with a tariff scheme.

Socioeconomic Planning Secretary Ernesto M. Pernia told reporters on Monday that the economic team will likely pitch its plan to President Rodrigo R. Duterte before his second State of the Nation Address (SoNA) on July 24.

“We will suggest to him that it could be declared a priority bill so that it can be approved sooner rather than later, so we don’t have to go through to this complicated process of extending trade concessions to countries or members of WTO (World Trade Organization) that might do something in exchange for our delay in tariffication,” said Mr. Pernia, who also co-chairs the Committee on Tariff and Related Matters.

“We are going to have a letter, I think, before the SoNA so that we will have the opportunity to raise the issue,” he added.

Mr. Duterte signed Executive Order No. 23 in April to maintain the quantitative restrictions (QR) on imported rice, meat and other products for another three years, pending the ratification of both chambers of Congress of the amendments to Republic Act 8178 or the Tariffication Act of 1996.

The law would authorize the President to set import duties on the staple grain, upon the expiry of the country’s waiver for the special treatment on rice on July 1.

“… [It] has to be deliberated by Congress before the ratification can take effect. In the meantime, as the deliberations in Congress will take some time what we are trying to do is to not infuriate the members of the WTO, in terms of retaliation,” said Mr. Pernia.

“2020 is quite distant, so we hope that the approval of the tariffication will come sooner so that we don’t have to be extending concessions,” he added.

The country was allowed to impose temporary QRs on rice after the government was allowed “special treatment” for the staple grain upon acceding to the WTO in 1995.

Through this arrangement, the Philippines was given more time to achieve self-sufficiency in rice, a move expected to counter the damaging impact of the expected influx of cheap rice imports.

During the negotiations for the second extension, which was granted in 2014, the Philippines had agreed to, among others, increase the Minimum Access Volume (MAV) to 805,200 metric tons and reduce the in-quota tariff to 35% corresponding to the Asean Trade in Goods Agreement duty and a most-favored nation rate of 40% for volumes imported outside the MAV.

The National Economic and Development Authority said that introducing competition in the domestic market through the tariffication scheme would encourage farmers to increase their self-sufficiency.

Finance Secretary Carlos G. Dominguez III said earlier that he is considering proposing a seasonal tariff for rice, with low tariff rates during the lean months and higher rates during harvest season — but Mr. Pernia said this scheme has yet to be reviewed by the economic team.

“We discuss things and arrive at common decisions. But we haven’t discussed (seasonal tariffs) yet,” Mr. Pernia said. — Elijah Joseph C. Tubayan

TDF rates end mixed as demand drops slightly

RATES for the central bank’s term deposit auction posted mixed movements yesterday, with the week-long yield hitting a two-month high while the month-long tenor dropped anew amid ample money supply in the system.

Total demand for the term deposits on offer reached P160.647 billion, slipping from the P187.62 billion bids tallied a week ago and settling below the P180 billion which the Bangko Sentral ng Pilipinas (BSP) wanted to auction off.

The average yield under the seven-day tenor surged to 3.2189% from 3.1648% the previous week, the highest since the 3.2468% rate seen during the May 17 auction.

This came as banks wanted to place P44.378 billion with the central bank for a week-long term, slightly higher than the P40-billion auction size.

Banks asked for returns ranging from 3.05-3.3%, which in turn drove the average rate higher even as the BSP was able to award the entire P40-billion volume.

On the other hand, the 28-day term deposits remained undersubscribed as offers totalled P116.269 billion, lower than the past week’s P137.59 billion and settling below the P140-billion volume set by the BSP.

The average rate, however, fell to 3.4892% from 3.4909%, sustaining a two-week decline.

The TDF is the central bank’s primary tool to capture excess money supply in the financial system by allowing banks to place their idle funds with the BSP — those which are not utilized for loans or set aside as reserves — in exchange for a small return.

Through the window, the central bank is looking to bring market rates closer to its 3% benchmark rate, while also prodding increased interbank lending to augment liquidity positions.

Only banks are now able to participate in the weekly central bank auctions as the one-year leeway given to trust firms expired last June 30.

BSP Governor Nestor A. Espenilla, Jr. has said that TDF settings are under constant review, while noting that the central bank’s decisions will remain “data-driven.”

For next week, the BSP has kept the auction amount steady at P180 billion, split into P40 billion for the week-long term and P140 billion for the month-long deposits.

Analysts have said that the BSP will likely keep the TDF volumes steady for the meantime and hold off the planned adjustments to the 20% reserve requirement imposed on big banks as the domestic financial market remains awash with cash. — Melissa Luz T. Lopez

Negative yields force Japan banks to consider mergers

HIROSHI IWAMA and Mitsunori Watanabe used to joke about merging their banks in central Japan. When the Bank of Japan introduced negative interest rates last year, things got serious.

The two golfing buddies run Mie Bank Ltd. and Daisan Bank Ltd., two of Japan’s roughly 100 regional lenders. For years, these banks dotted around the nation have faced headwinds as rural areas emptied and aged. With the monetary-policy shift, their plight became acute.

“It changed from being something we might have to think about someday to something we had to think about now,” Daisan President Iwama, 62, said in an interview. Daisan and Mie, led by Watanabe, also 62, announced plans to merge in February.

With the pressure showing few signs of easing, more banking executives are coming to the same conclusion. Consultancy Bain & Co. estimates that about half of Japan’s lenders will disappear by around 2025 as they face a stark choice: merge or close.

Despite the existential threat, many Japanese banks remain resistant to teaming up due to long-standing rivalries and different corporate identities.

Regional banks are “highly proud” institutions, and “many of them wouldn’t even be able to change their names,” Hirofumi Gomi, a former chief of the Financial Services Agency, said in an interview. “It’s hard to imagine a wave of mergers and reorganization given the history of regional banks to date.”

The introduction of negative rates has crushed banks’ lending profitability, in a further blow to the financial ecosystem in rural areas that has been strained by more than two decades of economic stagnation and population flight to large cities. Unlike so-called megabanks like Mitsubishi UFJ Financial Group Inc., regional lenders don’t have the global reach or financial muscle to escape the pressures by expanding overseas.

EXTINCTION THREAT
Combined profit at Japan’s 82 listed regional banks fell 11% in the year ended March 31, and is likely to drop another 17% this fiscal year, SMBC Nikko Securities Inc. analysts estimated in May. Banks that can’t find a way to cope with muted loan demand and razor-thin lending margins “face extinction,” according to S&P Global Ratings analyst Ryoji Yoshizawa.

“The profitability situation for regional banks is very severe,” said Yoshizawa, who has worked in Japan’s banking industry for 30 years. While large lenders have made certain progress after merging years ago and re-deploying staff, “it’s clear that regional banks need to do more,” he said.

There are glimmers of hope. Regional lenders have struck 21 mergers or alliances since 2003, and the pace is gradually picking up, according to Daiwa Institute of Research. Three deals have been announced this year as banks seek to boost their loan books, eliminate competition and save costs by unifying functions.

“I think on the whole this is going to keep moving forward,” Mie Bank President Watanabe said.

NO PANACEA
But even merging is no panacea. By 2025, banks will need loan assets of at least 8 trillion yen ($70 billion) at their core lending businesses to be profitable, Daiwa Institute estimates. Only a handful of regional banks clear that hurdle, and Mie and Daisan will reach just a third of the threshold after combining.

“What banks do with loan business is basically all the same, so economy of scale is key,” said Hayanari Uchino, a managing director at Daiwa Institute.

Trying to achieve that scale may invite the attentions of the competition watchdog. The Fair Trade Commission has been holding up a planned merger by Fukuoka Financial Group Inc. and Eighteenth Bank Ltd. on the southern island of Kyushu since last year, citing monopoly concerns. SMBC Nikko Securities analysts have described the prospects of completing that deal as “grim.”

Regional banks thrived during the heyday of Japan’s postwar revival as small businesses built factories and household incomes grew. Now, finding borrowers in rural areas is tough because the demographic outlook there is the worst. In Mie, the population is forecast to drop 13% by 2035, more than the 9.3% decline projected nationwide, according to the National Institute of Population and Social Security Research.

URBAN PUSH
One of Mie Prefecture’s largest employers, food manufacturer Imuraya Group Co., maintains a relatively equal balance in borrowing from MUFG, Daisan and another local bank, Hyakugo Bank Ltd., according to Chairman Takeo Asada. He said Daisan and Mie Bank will complement each other geographically in the north and south of the prefecture and create a stronger institution together.

“Regional banks have rich local information, which can be extremely useful,” Asada said in an interview at the company’s headquarters in Tsu. Daisan recently helped Imuraya, the maker of Japan’s much-loved “Azuki Bar,” a frozen red-bean snack, to find an idled factory to lease, he said.

Daisan and Mie Bank are hoping that their deal will make it easier to get more business in urban areas that have better growth prospects. The new entity will have a network of 34 branches in neighboring Aichi Prefecture, home to manufacturing powerhouses such as Toyota Motor Corp.

“It would take considerable time to open a new branch and bring it into the black in the current interest-rate environment,” Watanabe said. “From that perspective, we’re buying ourselves some time.” — Bloomberg

Peso slips as players reposition after Tuesday’s sharp increase

THE PESO ended almost flat against the dollar on Wednesday after most market players tweaked their positions following Tuesday’s sharp rise.

The local currency closed at P50.55 versus the greenback yesterday, slipping by two centavos from its P50.53-per-dollar finish on Tuesday.

The peso opened Wednesday’s session at P50.47 per dollar, close to its intraday peak of P50.45 versus the foreign currency. Its worst showing for the day was at P50.65-to-the-dollar.

Dollars traded amounted to $595.7 million, down from the $629.1 million logged the previous session.

One trader attributed the peso’s slight decline to the repositioning of some investors after the local unit’s large gain versus the dollar on Tuesday.

“The peso’s close was still pretty volatile… It opened lower then traded sharply higher because after some of the positions were washed out [on Tuesday,] now they tried to reinstate it [yesterday,]” the trader said by phone.

Last Tuesday, the peso ended sharply higher versus the dollar at P50.53, jumping 16.5 centavos from its P50.695-per-dollar finish on Monday, on the back of central bank intervention.

“From there, there were agent banks selling dollars that sort of capped the market close at P55 per dollar,” the trader added.

Asked if there were other factors that contributed to the pair’s trading on Wednesday, the trader said: “Basically the repositioning of some market players dictated the session.”

Meanwhile, another trader said by phone: “The dollar-peso rallied but was capped at the P50.65 per dollar low on renewed appetite for risk currencies with oil prices recovering.”

“[The other night,] we saw risk currencies rallying so it dragged the dollar, so there was pressure on the downside in favor of the peso,” the trader added.

For today, one trader sees the peso moving within P50.40-P50.70 versus the dollar while the other trader said the exchange rate may settle between the P50.50 to P50.70 range.

Most Asian currencies were higher on Wednesday against the dollar, which was hit by new suggestions of Russian influence in the 2016 US presidential election and amid wider caution ahead of Federal Reserve chair Janet L. Yellen’s semi-annual congressional address.

The peso bucked the trend for the day as data showed that the Philippines posted its widest trade deficit in decades in May.

Jose Mario I. Cuyegkeng, senior economist at ING Bank N.V. Manila, said while the widening trade deficit can be viewed as positive from a domestic demand perspective, the currency may weaken further in the near-term owing to a further widening in the deficit.

“From a currency standpoint, until investors feel that imports work through the economy and push it to a higher growth path, then the market focus would be on the near term impact of a deterioration in balance of trade through a weaker exchange rate,” Mr. Cuyegkeng said.

Investors will now be looking at the next remittance report for an indication on whether structural inflows can mitigate the deterioration in the trade balance, he said.

The currencies of South Korea, Taiwan and Thailand all posted their biggest intraday percentage gains in at least a month as investors pared their greenback positions. The dollar index, which tracks the greenback against six major rivals, was 0.09% lower at 95.580 at 0540 GMT. — J.M.D. Soliman with Reuters

BPI Family eyes 10% profit growth

BPI FAMILY Savings Bank, Inc. is looking to grow its bottom line by a tenth this year, a slight increase from last year’s figure, as the lender is currently streamlining its processes to manage risks as part of a wider bid to double its overall businesses in five years.

The thrift banking arm of Ayala-led Bank of the Philippine Islands (BPI) said it eyes a softer expansion in its net income by end-2017.

“For this year, we’re projecting a slower growth of about 10%,” BPI Family Savings Bank President Maria Cristina “Ginbee” L. Go said in a briefing on Wednesday when asked for the lender’s outlook for the year.

The thrift lender saw its net income reach P4.4 billion in 2016, up 5% from P4.2 billion the previous year.

For the past five years, BPI Family Savings’ bottom line grew at an average rate of 10%.

Asked why the bank sees slower growth for this year, Ms. Go said, “We are more prudent at this time. We’re viewing our credit models because we’ve aggressively grown in the past and we have to make sure that we manage the risks as well.”

“Lending has its own attendant risks and we have to make sure that our own credit losses are well within boundaries that’s why we’re doing a lot of process improvements, streamlining, reviewing our credit models,” she added.

For this year, the main drivers for the expected 10% growth will be both the banks’ loans and deposits, the official said.

Asked for the bank’s second quarter financial performance, Ms. Go said it was “very strong in terms of net income,” but declined to disclose any figures.

Meanwhile, BPI Family Savings Bank wants to double its overall business growth in the next five years, primarily in terms of assets, loans and deposits, the official said.

“We hope to replicate our growth performance in the past five years, we’re doubling again in the next five years…and it’s on a bigger base, so we hope to double our business in five years,” Ms. Go said.

According to official, they are looking to double BPI Family Savings Bank’s asset base to P540 billion in five years from P270 billion at end-2016, to be driven by its deposits and loans.

Meanwhile, it wants its total loan book to reach P400 billion in the next five years from P207 billion last year. Total deposits, on the other hand, are projected to grow to P480 billion in five years from the P240 billion booked at end-2016.

Currently, BPI Family Savings Bank’s total customer base is at 1.1 million, bulk of which are retail clients.

“We see the growth opportunities in terms of base really on the personal banking, the more mass-based clients, which is the target clients of BPI Family,” Ms. Go said.

She said the thrift lender is planing to open six more branches before the year ends, all of which will be located outside Metro Manila, with some to be set up in the Visayas and Mindanao.

This will bring its total branch network to 162 by yearend from the current 156.

“We are going to expand our presence and footprint in the Philippines. We’ve realized we are very concentrated in NCR (National Capital Region) and Metro Manila, so we are extending ourselves to outside of Metro Manila, outside of NCR, into more provincial areas,” Ms. Go said.

A month ago, the bank opened its branch in Lipa, Batangas and last week, it opened its Lingayen branch, according to the official. — Janine Marie D. Soliman

DFA affirms PHL ‘strategy’ on arbitral ruling

By Jil Danielle M. Caro

THE DEPARTMENT of Foreign Affairs said on Wednesday the Philippines “shall remain an enemy to none and a friend to all in its pursuit of economic and political benefits for the country,” one year after the Hague ruling upholding the country’s arbitral case against China in the disputed West Philippine Sea.

“[T]he Duterte administration is committed to its strategy to strengthen old allies and engage new partner nations,” the DFA said in a statement on Wednesday, July 12, a full year after the Permanent Court of Arbitration in the Hague ruled in the Philippines’ favor on the arbitral case against China brought by the previous administration of Benigno S. C. Aquino III.

The DFA said President Rodrigo R. Duterte’s administration “reaffirms its unwavering commitment to protect our country’s territorial claims and maritime entitlements.”

However, the administration “believes that the ongoing territorial dispute in the West Philippine Sea should further be resolved in a manner consistent with the spirit of good neighborly relations,” the DFA added.

Further, the department cited “President Duterte’s priority of regional peace and stability (which) has led to the healthy environment of dialogue, cooperation, and development.”

According to the DFA, the country’s approach “has led to great benefits for the country, allowing us considerable economic gains, as well as strengthening our status as ASEAN chair and regional peacemaker.” The Philippines leads this year’s meetings among the members of the Association of Southeast Asian Nations.

The DFA said that with the country’s “adoption of positive neighborly relations, our fishermen are back exercising their livelihood in Scarborough Shoal.”

“We have received investment and financial assistance commitments upwards of $30 billion our partners in the region,” DFA said, adding, “These significant developments have likewise allowed our defense resources to also address other pressing security concerns facing the country.”

“The bold initiatives of the administration in pursuing an independent foreign policy have become a game changer not only in the geopolitical landscape in the region but more importantly in the lives of our people,” the DFA also said.

‘EFFECT OF THE AWARD WEAKENS’
Sought for comment, Herman Joseph S. Kraft, associate professor at the Department of Political Science, University of the Philippines, said in a phone interview:

“It’s true. We have been receiving benefits from our ties with China. It is true that those benefits tie in with the priorities in diplomacy of the Duterte administration. The priorities have always been expressed in terms of economic benefits, that is what is being emphasized. There is no question about that.”

Mr. Kraft noted, however, that the political impact of the country’s relationship with China, other than its evident economic impact, should be identified.

“What is its political impact? As time goes by, between the assertion and the awarding, and until the implementation of the award, it seems that the effect of the award weakens in terms of how should we use it,” he said.

Mr. Kraft added that “it seems we just gave up,” but explained further, “I won’t say it’s alarming in a sense that we should be afraid already. Let’s just say, it’s disappointing that there’s little appreciation of the implications of the arbitral decision.”

Also sought for comment, Mr. Ramon C. Casiple, executive director at the Institute for Political and Electoral Reform (IPER), said via e-mail that he thinks the DFA’s statement “does not propose to be passive in relation to our claims in the SCS (South China Sea) or in relation to China’s own claims.”

“Nor does it means passivity in pursuing our own claims. It simply means that the Duterte administration has decided on a strategy to pursue these claims within the framework of our independent foreign policy,” he added.

‘NEGATIVE LESSON’
Mr. Casiple also noted that Mr. Duterte, in his past statements, has only said he “will use the arbitral ruling as one of the bases of our negotiating position,” adding, “what it will not do is to just insist on the ruling on a take or leave basis since this is not conducive to negotiations (the Chinese side has time and again also reiterated its nonrecognition of the arbitral ruling).”

“If “passivity” means not undertaking military and political offensives against China, there is no justification for these at this time when one is negotiating, nor do we have the capability to force our position on the Chinese government,” Mr. Caspiple said.

He added, “The Duterte administration, I think, learned the negative lesson of the loss of the Panatag Shoal by the Aquino administration which insisted on a confrontational strategy with no realistic support from its allies, including the US.”

For his part, Mr. Duterte said on Wednesday, addressing the Bureau of Jail Management and Penology on the occasion of its 26th anniversary: “You know, I come from an agricultural region sa Mindanao. ’Yung mga pineapple, banana, hindi na nabibili (The pineapple and banana [we produce] are no longer being bought), because China refused the importation…. So I changed a little bit. So I started to — not really separate. Because we have this RP-US pact. So I could not enter into any other military alliances, that would be a violation of the treaty.”

“But on economic and terrorism, …I can always go to other nations for help,” he added.

Duterte wants Supt.Marcos reinstated

By Ian Nicolas P. Cigaral
Reporter

PRESIDENT RODRIGO R. Duterte on Wednesday said he wants an embattled police officer reinstated despite facing criminal raps over the killing of a city mayor allegedly involved in the illegal drugs trade in central Philippines.

Police Superintendent Marvin Wynn Marcos was charged with homicide, since downgraded from murder, in connection with the Nov. 5, 2016 raid conducted by members of Criminal Investigation and Detection Group (CIDG)-Region 8.

The operation, headed by Mr. Marcos, led to the killing of Albuera, Leyte Mayor Rolando R. Espinosa, Sr. and inmate Raul Yap at the sub-provincial jail in Baybay, Leyte. In December that year, the National Bureau of Investigation (NBI) qualified the incident as a “rubout.”

In his speech before cops during the 26th anniversary of the Bureau of Jail Management and Penology (BJMP), Mr. Duterte said he wants Mr. Marcos’s job back because he believes the police officer “was not part of the raiding team.”

“Sabi ko, ‘Ibalik ninyo sa trabaho ’yang mama na ’yan. Wala naman doon ’yan eh (I said, ‘bring Marcos’s job back. He was not there’). He was too far away here. He was not part of the raiding team,’” Mr. Duterte said.

“I will never, never allow a military man, a government man, a policeman na makukulong (to be jailed) for doing his duty and obeying my order,” he added.

Last December, Mr. Duterte admitted he ordered Philippine National Police (PNP) Dir. Gen. Ronald “Bato” M. dela Rosa to reinstate Mr. Marcos because he is “doing an investigative job.”

The President added that he will not “sacrifice” the policemen involved in the killing of Mr. Espinosa, but maintained he will not “obstruct” the case.

Mr. Marcos’s charges were lowered by the Office of the Justice Secretary last month to homicide from the previous non-bailable offense of murder because “the evidence on record do not support the allegation of evident premeditation.”

The PNP Internal Affairs Service (IAS) earlier recommended in its report the suspension of Mr. Marcos and the other policemen involved.

In a chance interview yesterday, Mr. Dela Rosa said he is in favor of Mr. Marcos’s return in service.

“Yes, sayang ’yun kung walang ginagawa, ’di ba? Sumusuweldo, walang ginagawa. E di pagtrabahuhin natin (Yes, it would be a waste if he would not work but still be paid. So let’s make him work again),” Mr. Dela Rosa said.

“Basta (Anyway), as far as the administrative case is concerned, that was already resolved. May resolution na favorably sa kanila (There’s a resolution favorable to them),” he added.

DoF bares Mighty deal to settle tax liabilities

By Elijah Joseph C. Tubayan
Reporter

EMBATTLED tobacco company Mighty Corp. has entered into a deal for the company’s sale to settle its tax liabilities, a statement by the Department of Finance (DoF) disclosed on Wednesday, July 12.

DoF said it is studying the settlement offer made by Mighty — which currently faces three criminal charges due to non-payment of excise taxes — to cover for their tax deficiencies through the sale of its assets to Japan Tobacco International (JTI) Philippines.

“We are studying the offer,” Finance Secretary Carlos G. Dominguez III said in a statement, reacting to the written settlement proposal sent by Mighty Corp. president and director Oscar P. Barrientos to Bureau of Internal Revenue (BIR) Commissioner Caesar R. Dulay in a letter dated July 10.

Mighty’s letter offers to settle P25 billion in tax liabilities by June 20, through an “interim loan” from JTI Philippines, and through the sale of Mighty Corp. and affiliates of its manufacturing and distribution business and assets — along with the intellectual property rights associated with these assets, including those owned by the company, Wong Chu King Holdings, Inc. — to JTI Philippines worth P45 billion, exclusive of value-added tax (VAT).

Broken down, Mighty Corp. will remit to the government P3.5 billion on June 20 in deficiency excise taxes on its cigarette products that are now the subject of three tax cases, and P21.5 billion for the liabilities of the company and its shareholders, as well as the company officers for all internal revenue taxes, including income tax from 2010 to 2016 and the tax period up to the closing of the proposed transaction with JTI, and all transaction taxes related to the agreement with JTI, paid upon completion of the deal between the two firms.

“The initial payment of P3.5 billion will be paid by the company on the company’s behalf on or before July 20, 2017. A binding Memorandum of Agreement in relation to the Proposed Transaction (with JTI) will be concluded shortly (and prior to July 20, 2017) subject to finalizing terms with JTI and JTI completing its due diligence,” the letter read.

The DoF noted, however, that the offer was separate from the criminal complaints the tobacco firm currently faces due to non-payment of excise taxes and possession of counterfeit internal revenue stamps.

After separate raids by the BIR and Customs bureau at Mighty Corp.’s warehouses in Bulacan, Pampanga, and General Santos, the tax bureau filed three criminal complaints before the Justice department that totaled to P37.88 billion.

The Bureau of Customs, for its part, blacklisted the tobacco firm’s import accreditation to prevent them from continuing operations pending the conclusion of the criminal complaints.

Moreover, the DoF said Mr. Barrientos has requested the tax bureau for a reinvestigation of its pending criminal complaint, upon completion of the initial P3.5-billion payment.

“We also respectfully request the BIR to issue to the Company and its shareholders and officers following closing of the proposed transaction (with JTI) and the payment of the P21.5 billion the relevant Certificate of Availment of Compromise, a final tax assessment for all the Company’s excise and other tax issues described above, and relevant tax clearances to the Company, its shareholders and officers,” the letter said.

The DoF said Mr. Barrientos committed to retire the operations of Mighty Corp. following the conclusion of its deal with JTI.

Senators tackle removal of VAT exemptions

THE BUREAU of Internal Revenue (BIR) bats for including cooperatives and zero-rated exporters in the Tax Incentives Management and Transparency Act, to mandate reportorial obligations, in a bid to plug up revenue leakages.

But Senator Juan Eduardo M. Angara, chairman of the Senate Ways and Means Committee, said that instead of flat out removing the exemptions, the government should just tighten reportorial conditions and zero in on abusive cooperatives.

The committee on Wednesday held its sixth hearing, amid the congressional recess, on the tax reform program of President Rodrigo R. Duterte’s administration, after the first of four tax reform packages was approved last May by the House of Representatives before the recess. The matter is now in the Senate, as Congress resumes session before the end of this month.

Wednesday’s hearing tackled, among other things, the removal of value-added tax (VAT) exemptions of some sectors.

BIR spokesperson Assistant Commissioner Marissa O. Cabreros, for her part, told the committee that the tax bureau is having difficulty auditing transactions of cooperatives, as they fail to distinguish sales to members and nonmembers, and this would have determined whether certain transactions are subject to value-added tax.

“With reference to cooperatives, we believe (in) the creation of the cooperatives in general, but there are some cooperatives that are… taking advantage of the benefits given to real cooperatives,” she said, adding that the cooperative code prohibits the BIR from auditing cooperatives unless authorized by the Cooperative Development Authority.

Currently, cooperatives are exempt from paying VAT on their sales. Under House Bill 5636, or the proposed Tax Reform for Acceleration and Inclusion Act approved by the House, retains the VAT exemption for cooperatives. The Department of Finance (DoF) wants to push for removing these exemptions.

“Let’s look at the abuse of the cooperative structure, If there are provisions in the co(-)op code that needs amending, then by all means, let’s take a look at that,” Mr. Angara said.

For her part, Senator Cynthia A. Villar raised concerns about lifting the exemptions in the housing sector, particularly for the purchase of properties worth P3 million and below.

“The VAT exemptions on housing… the cheap costs of houses, you’re removing it from the people,” she said. “I don’t think we should discourage housing.”

DoF has proposed removing the VAT exemptions and providing vouchers on direct subsidies for the poor, in an effort to ensure that tax perks in housing are not taken advantage of by the rich.

Mr. Angara said they are open to retaining the said tax exemption: “We are free to amend it. The power is with us. Malala na kasi ’yung sitwasyon, tapos lalagyan pa natin ng buwis, di lalala pa lalo yung sitwasyon (The situation is critical, and if you add to that the taxes, it will worsen).”

In her turn to address the committee, DoF Undersecretary Antonette C. Tionko said in part: “We will consider their suggestions obviously and we will work with them to come up with a package that’s very acceptable to all parties concerned.”

Interviewed by reporters after the hearing, Senator Joseph Victor G. Ejercito said: “Marami pang (There are still many) issues that need to resolved. (Especially when it comes to petroleum, sweetened beverage, sa housing against ako diyan (I’m against removing tax exemptions in housing).”

Mr. Angara, in his interview with reporters, said: “Tingnan natin ang ginagawa natin manageable ang pandinig sector by sector tapos titingnan ang suma-total (Let’s see what we can do that’s manageable in hearing out sector by sector, then let’s see how things go as a whole).” — Elijah Joseph C. Tubayan, with Mario M. Banzon

Earthquake-affected islands facing longer power blackout

THE TARGET date to bring partial power supply back to the earthquake-hit islands of Leyte, Samar and Bohol has been moved to July 19 from July 16, the Department of Energy (DoE) announced yesterday, citing a report from grid operator National Grid Corporation of the Philippines (NGCP).

Undersecretary Felix William B. Fuentebella said based on a report from the NGCP on Wednesday morning, two damaged transformers were preventing the delivery of power to the three islands.

On July 6, a magnitude 6.5 earthquake occurred at 4:03 p.m., with epicenter around Jaro town in Leyte, but tremors were felt in most of the Visayas central islands.

Power supply in the islands of Panay, Negros and Cebu have also been affected by the facility damages and some areas continue to have rotational brownouts based on advisories by the electricity distributors.

Mr. Fuentebella said the damaged transformers were originally expected to be fixed on July 16, but this would not be possible, thus the new target date of July 19 given by NGCP.

By that date, however, only 40 megawatts (MW) of power can be supplied by sources coming from Luzon and Cebu, and the geothermal power plants operated by Energy Development Corp. in Leyte. This volume represents only 14% of the demand of the three islands, Mr. Fuentebella said.

He added that the distribution of the available power would be the call of NGCP, but the policy of the DoE is to first serve commercial areas. He said three million consumers are expected to be served in the quake-hit areas.

“By July 31 to about Aug. 1, or three weeks from now, 160 MW could be transmitted because 120 MW would be added to the 40 MW or 55% of the demand of 291 MW,” Mr. Fuentebella told reporters, partly in Filipino.

He said dismantled transformer facilities in Cebu would be transferred to the Ormoc substation to allow the transmission of the additional power capacity. — Victor V. Saulon

All 7 Mautes nabbed at NAIA released

NO LINK to the local terror group Maute, after all. This was the conclusion reached by authorities on the seven people, all with the family name Maute, who were barred Monday from leaving the country through the Ninoy Aquino International Airport (NAIA).

Three of them were released earlier upon confirmation of having no “deragotary record,” while the last four who were held, a father and his three sons, were released Tuesday, according to the police chief.

The father, Yasser Maute, and two of his sons — Ashary and Alnizar Maute — were released by the police after finding no evidence that they are linked to the IS-inspired Maute group that launched a rampage in Marawi City on May 23 and continue to hold ground in some parts where they are engaged in battle with government forces.

The other son, 17-year-old Abdul Rahman, was detained separately by the National Bureau of Investigation (NBI), but was also released after it was established that the person included in an arrest order list is just his namesake.

“They did not find reasonable ground to hold them further. It was not proven that those Maute are involved with those Maute who staged a rebellion in Marawi,” Police Chief General Ronald M. dela Rosa told reporters in an ambush interview yesterday.

However, the chief clarified that they can still be arrested in the future if they find sufficient evidence to support earlier suspicions.

“If an additional information will come up linking them, then they will not be cleared. As of now, as of yet, they are cleared, that is why we released them,” he said.

Mr. Dela Rosa added that as far as the police is concerned, the four can now leave the country as they have earlier planned. However, the Bureau of Immigration still has the final say.

“Since they are now released by the PNP (Philippine National Police), as of now, we don’t have any evidence against them, they can go. But it’s now the call of the Bureau of Immigration. That’s their turf already, departure from the country.”

Before being released, Yasser and his kin reportedly cried foul over the continued discrimination they have been receiving for bearing the family name Maute since the Marawi siege.

CNN Philippines reported that Atty. Elias Yusoph, the arrested Mautes’ lawyer, has advised innocent civilians with the Maute surname to submit an affidavit to the NBI to clear them of any affiliation with the Maute terror group. — Jil Danielle M. Caro

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