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‘Regime change’ at BoJ seen to boost confidence

A CHANGE of leadership at the Bank of Japan (BoJ) would offer a chance to bolster public confidence in its ability to defeat deflation, according to an economic adviser to Prime Minister Shinzo Abe.

“What’s important, especially this time, is whether we can undertake regime change,” Etsuro Honda said in a telephone interview on Friday. “It should be someone who is refreshing enough and can renew people’s impressions with personal charm and sincerity.”

Honda’s comments contrast with those he made in January, when he said reappointing BoJ Governor Haruhiko Kuroda, whose term ends in April next year, was an option, citing the importance of continuity at the central bank.

Honda declined to comment on potential candidates to replace Kuroda. He said he expects the selection process for BoJ leadership positions to start sometime this fall. The central bank’s two deputy governors’ terms end in March.

Honda, who is serving as ambassador to Switzerland, has been mentioned by private economists as a candidate for BoJ chief. He declined to comment on the possibility.

GROWING SPECULATION
With most economists forecasting no change to monetary policy this year, the question of who will serve as BoJ governor after Kuroda’s term ends is gaining more attention.

In a recent interview with Bloomberg, Nobuyuki Nahakara, a former BoJ board member and a mentor to Abe, said Kuroda should step down because new ideas were needed. Masahiro Kawai, an ally of the governor, said in a separate interview that Kuroda should serve for another term to finish what he started.

Kuroda was the candidate most frequently cited by economists in a Bloomberg survey last month. He has fended off questions about who will be governor after April by noting that it is a question for the government.

One thing that would disqualify potential candidates, Honda suggested, would be supporting another increase in the nation’s sales tax before the end of deflation was achieved. A similar tax hike in 2014 was widely blamed for derailing the economy. Honda said it also dashed expectations for Abenomics.

“If one doesn’t have a deep understanding of Abe’s strategy to overcome deflation, that person is absolutely not qualified,” he said.

Other qualities needed in a BoJ governor include consistent ideas on macroeconomic policies, a strong determination to fight deflation and the ability to communicate smoothly with the prime minister, overseas central bank chiefs and financial markets, he said.

A series of scandals and a resounding loss for his party in voting for the Tokyo assembly on Sunday have weakened Abe politically, but analysts expect him to remain prime minister at least until a party leadership contest in the autumn of next year.

Honda’s relationship with Abe goes back more than three decades, and the two communicate frequently. Honda was consulted on Abe’s choice of BoJ governor in 2013 as well as the board members appointed since then. Honda also successfully persuaded Abe to postpone a planned sale tax hike scheduled for 2015.

CONQUERING DEFLATION
There is no need for the BoJ to add stimulus now because inflationary pressures are rising due to a tight labor market and improving output gap, Honda said. The BoJ should keep its target for 10-year bond yields around 0% “as long as possible” until 2% inflation is stable, he said.

Honda said he has had to acknowledge that the BoJ faces a limit to its easing program, because it must consider the impact on financial stability, such as through profits at regional banks, a view he didn’t hold before the start of Abenomics in 2013.

What the economy needs now is supportive fiscal policy, which at the very least shouldn’t be tightened until deflation is defeated, Honda said. The government should make the most of the ultra-low interest rates created by monetary policy.

“It’s a fundamental principle that we keep fiscal policy expansionary to make it and monetary policy the two wheels of the economy,” Honda said. — Bloomberg

Peso edges up ahead of US data

THE PESO moved sideways versus the dollar yesterday amid quiet trading, with US markets closed for a holiday and as market players look towards key data releases scheduled later this week.

The local currency closed at P50.52 against the greenback, gaining 2.5 centavos from its P50.545 finish last Monday which was its weakest showing in over a decade.

The peso opened weaker at P50.55 during Tuesday’s trading and hit a low of P50.58-to-a-dollar within the session. It touched P50.48 as its best showing.

Dollars that exchanged hands amounted to $540.3 million, rising from $395 million the previous day to return to the average daily volume traded at the foreign exchange market.

Traders interviewed yesterday said the peso was flat versus the greenback due to a lack of leads, as financial markets in the United States were closed in observance of Independence Day, with all eyes looking towards the release of “critical” economic data.

“The exchange rate moved sideways today due to caution ahead of the FOMC (Federal Open Market Committee) minutes and the US non-farm payrolls report on Friday. The peso’s slight appreciation might be a result of profit taking, given that US manufacturing data last night came out stronger than expected,” one trader said on Tuesday.

Another trader noted that peso-dollar trade is simply “consolidating” and moving within range, but saw an initial depreciation due to North Korea’s missile launch yesterday morning.

“North Korea’s missile launch spurred some weakness in the peso, but as soon as the initial news died down, the market traded lower,” the second trader said.

Reuters reported that Pyongyang made fired an intercontinental ballistic missile on Tuesday, triggering geopolitical tensions with neighboring countries and the US anew as it landed in Japanese waters.

Both analysts expect the peso to trade range-bound today as the market anticipates the release of the minutes of the US Federal Reserve’s June 13-14 meeting on Thursday and the latest jobs data on Friday night, as they look for hints on the timing of the central bank’s next policy moves.

The second trader said the Fed minutes “could change market sentiment,” amid mixed expectations as to whether a third rate hike will be introduced this 2017. Fed officials stood bullish on the US economy, although growth figures released last week came out softer than expected.

For today, the first trader sees the peso trading within P50.45 to P50.65 versus the dollar, while the other trader forecasts a P50.40-P50.60 range.

Jose Mario I. Cuyegkeng, senior economist at ING Bank N.V. Manila, said strong demand for dollars during the imports season is likely behind the peso’s weakness.

“In the near term, it’s imports season — normally, it’s up to mid-October. When imports rise, that creates pressure or demand for the US dollar,” Mr. Cuyegkeng told reporters yesterday.

Imports grew by 11.1% from January-April to reach $28.91 billion from $26.02 billion in the same period last year, according to the Philippine Statistics Authority. — Melissa Luz T. Lopez

BSP asks banks to report repurchase agreements

By Melissa Luz T. Lopez,
Senior Reporter

THE CENTRAL BANK has required banks to report the volume of repurchase deals they forge with other firms starting last month, as the regulator sharpens its watch on the local money market.

The central bank will require banks to report on their repurchase deals. — BW FILE PHOTO

The Bangko Sentral ng Pilipinas (BSP) through Memorandum M-2017-020 told banks and quasi-banks to start submitting monthly reports covering their repurchase agreements or repo effective June 30.

In prescribing the reporting template, the BSP said the submission of such data “aims to strengthen financial surveillance, particularly in monitoring market trends and vulnerabilities in repo markets, to enable supervisory authorities to formulate effective policy responses to ensure continued functioning and efficiency of the financial system,” the issuance read, as signed by now-BSP Governor Nestor A. Espenilla, Jr. on June 28.

Under a repo agreement, one party sells a security — such as Treasury bills and bonds — to another which it will buy back at a specified price and a future date, in the process providing the seller with short-term liquidity which it can use to hand out loans and service additional client withdrawals.

The BSP ordered a trial period for the data submissions covering transactions in November 2016, as provided under Circular 923 issued in September last year.

Banks and quasi-banks must report the amount of daily repo transactions to the central bank, as well as the outstanding balance by the end of each month. The report must also reflect transaction details, such as the outstanding balance, the repo rate, and the remaining maturity of each agreement.

Such submissions should be “comprehensive” and “transactional-level data,” which would allow the BSP to monitor these fund movements closely.

Details about counterparties, particularly the repo buyer or cash lender must also be provided, and will be used to map the interconnectedness of such credit agreements. The type, quality, and fair value of a repurchase security must also be disclosed, the BSP said.

Currently, the BSP buys and sells government-issued debt papers held by banks with a 3.5% spread — the central bank’s benchmark repurchase rate — in order to expand or reduce the amount of money circulating in the financial system.

The increasing repo transactions are expected to help deepen the country’s capital markets, as it would unlock more funds which can support additional economic activity.

During his first speech as central bank chief on Monday, Mr. Espenilla vowed to work closely with other government agencies in order to “accelerate capital market reforms,” building on the gains made by his predecessor.

Lenders dump bonds in India tug-of-war with funds

INDIA’S $750-billion sovereign-debt market is caught in a tug of war between foreign investors and state-run banks, the biggest holders of the securities.

As lenders sold 952 billion rupees ($14.7 billion) of sovereign bonds last quarter, overseas funds added more than 422 billion rupees to their holdings of the debt. The dichotomy is stemming from the potential for future gains that the two investor classes see in what has been emerging Asia’s best-performing market in the last three months.

For global investors like Franklin Templeton’s star bond-fund manager Michael Hasenstab, structural reforms by Prime Minister Narendra Modi, relatively high yields and a stable exchange rate make India a “sweet spot” among emerging markets. At home, a central bank nearing the end of its monetary easing cycle and risks emanating from farm-loan waivers are stoking caution after a three-year bond run.

“There are hardly any trading gains left in the market, much of the party seems to be over,” said Vijay Sharma, New Delhi-based executive vice-president for fixed income at PNB Gilts Ltd., a unit of India’s third-largest state lender by value.

“We expect the Reserve Bank of India (RBI) to deliver a 25-basis point rate cut in August and signal that more reductions won’t be coming.”

Local investors are also worried about a potential increase in debt supply, amid risks that Indian states lining up to rescue indebted farmers will fund a part of such bailouts by borrowing more from the bond market. With their higher yields, securities issued by regional governments could jeopardize the federal administration’s borrowing program.

While an RBI easing also risks narrowing the spread Indian notes offer over Treasuries, global money managers say the Asian nation’s real rates will still remain high in relative terms, and shouldn’t cause much harm to its carry-trade potential. Despite falling 231 basis points in the last three years, the nation’s 10-year bond yield is still the highest among major regional markets after Indonesia.

Overseas investors are also lured by India’s political stability and its central bank’s continued efforts to rein in consumer-price inflation, which eased to a record low of 2.18% in May. Borrowing in dollars to purchase rupee assets has earned 7.5% so far this year, the highest carry returns in Asia, data compiled by Bloomberg show.

India has drawn interest “due to its attractive carry, against the backdrop of a firm political mandate, a gradually improving macro story, and a stable currency,” said Wontae Kim, a Singapore-based research analyst at Western Asset Management Co., which oversaw $433 billion at the end of March. “Other markets may have higher absolute yields, but there aren’t many offering the kind of yields seen in India that also have the steady environment necessary to engender greater investor confidence.”

Foreign holdings of Indian debt surged by 804 billion rupees in the three months ended June, the highest for any quarter in National Securities Depository Ltd.’s data going back to 2011. Rupee sovereign bonds handed investors a return of 3.4% in the last three months, the highest in emerging Asia, according to indexes compiled by Bloomberg. India’s benchmark 10-year yield fell 17 basis points last quarter.

“Unprecedented” structural reforms by Modi will have long-lasting, positive implications for Indian markets, Franklin Templeton’s Hasenstab said in a video interview on the firm’s YouTube channel last week. Conditions are “very good for the bond market,” he said, adding yields are likely to be stable or declining. — Bloomberg

New (volt)age

By Aries B. Espinosa

IN a landmark event that could possibly jump-start the industry for electric-powered vehicles into the mainstream in this part of the world, a multi-sector gathering discussed the realities and prospects of producing, running, and maintaining full-electric and hybrid vehicles in Southeast Asia.

On June 29-30, the 1st Asean Electric and Hybrid Vehicles Summit was held at the World Trade Center in Pasay City. Co-presented by the Board of Investments, the Electric Vehicle Association of the Philippines, the Chamber of Automotive Manufacturers of the Philippines, Inc., the Department of Trade and Industry, and Manila Electric Company, the two-day summit gathered over 600 local and foreign delegates, and attracted hundreds of visitors.

The summit serves as the jump-off point for alternative fuel vehicle advocates and allied industries to formulate definite action plans and platforms in their bid to create a positive long-term impact for society and the environment.

Among the global auto manufacturers that exhibited their electric and hybrid vehicles at the event were Toyota (Prius plug-in hybrid), Lexus (300h), Mitsubishi (Outlander PHEV and i-Miev), and Nissan (Leaf and Note e-Power).

On June 30, Nissan Philippines, Inc. held a round table regarding Nissan’s push for the EV and hybrid market in the region.

Yutaka Sanada, regional SVP of Nissan Asia and Oceania, presented an overview of Nissan Motor Corp.’s research and advances in EV technology.

“In order to highlight Nissan’s EVs, the customer aspect is very important. And that is our key message: Our customers are central to the issues of global warming, urbanization, air pollution, renewable energy, and the decision to choose between vehicles powered by ICEs [internal combustion engines] and EVs,” Mr. Sanada stressed.

He revealed key data necessitating the sea change in favor of mainstream EV and hybrid production and sales:

• The global transport sector’s share of CO2 emissions (the driver of climate change) has gone up to 23%, or up by 71%, since 1990;

• CO2 emissions of ICEs have not only come from their operation, but also from their production and maintenance; CO2 emissions from EVs only come from where their power has been sourced (i.e. electricity generated from coal-fired power plants);

• Among all existing types of engines (ICEs, hybrid EVs, and EVs), EVs come closest to meeting the new vehicle “well-to-wheel” CO2 emissions reduction target set forth by the COP21, or the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change — signed by 196 countries — by year 2020.

• Electricity generation via wind and solar power are becoming more affordable and competitive;

• Rapid urbanization in Southeast Asian countries are resulting in more traffic-congested cities, which in turn increase air pollution levels in these areas. This is forcing governments to implement stricter emissions laws for ICEs;

• Stricter emissions regulations will drive the costs of ICE drivetrains up, while production costs of BEVs (battery electric vehicles) will go down. Independent agencies forecast a “cost crossover,” wherein BEVs will become more affordable than ICEs, by the mid-2020s, and;

• Under the Nissan Intelligent Mobility philosophy, the automaker’s EV cars have resulted in “zero emissions and zero fatalities,” its units logging “over three billion kilometers without any critical incidents.”

At the summit’s exhibit area, Nissan displayed the world’s best-selling EV, the Leaf, short for “Leading Environmentally friendly Affordable Family car,” and the Note e-Power hatchback, which dislodged the Toyota Prius as Japan’s best-selling car in January.

Nissan, which boasts of being the leader in the global EV market with total sales of 263,000 units (and under its alliance with Renault, 350,000 EVs have been sold since the introduction of the Leaf in late 2010), has yet to reveal definite plans for the sale and distribution of its Leaf and Note e-Power in the Southeast Asian and Philippine markets.

Mitsubishi donates eco cars to DENR

MITSUBISHI Motors Corp. (MMC) at the ASEAN Electric and Hybrid Vehicles Summit turned over five Mitsubishi i-MiEV hatchbacks and five Outlander PHEV SUVs to the Department of Environment and Natural Resources (DENR). MMC said the donation is part of its efforts in promoting clean energy and environmental protection. The vehicles will be used by DENR personnel stationed at the agency’s central office in Quezon City, and regional offices in Cebu and Davao. Besides the vehicles, MMC will also install quick battery charging systems at some DENR offices, and has committed to establish in the Philippines within five years mangrove and bamboo plantations covering 100 hectares.

Three of world’s leading alternative-fuel vehicle makers — Nissan, Toyota and Mitsubishi — displayed models at the ASEAN electric and hybrid car summit.

Nissan officials Ramesh Narasimhan (left) and Yutaka Sanada discuss the brand’s strategy for electric vehicles, which at present count the Leaf (2nd photo) and Note e-Power (3rd photo). — ARIES B. ESPINOSA

Toyota shows off its new Prius PHV.

DRIVES | Honda BR-V 1.5 S Modulo

THE Honda BR-V is shorter, narrower and lower than its more upscale CR-V stable-mate. But the former’s three-row seating, as opposed to the latter’s conventional two-row setup, means the BR-V can fit seven. Credit here goes to clever packaging; the BR-V has a wheelbase that stretches 14 centimeters more compared to that under the CR-V. This made room for the extra pair of seats.

Cockpit
Audi Q2 1.4 TFSI in Havana

+ “Handy” best describes the BR-V. In certain instances its capacity to shuttle a septet would mean negating the need to take a second car. And, even with its third-row seats up, a reasonable amount of cargo can fit aft of the rearmost seats. This spot is not that difficult to get in or out of, too, thanks to middle-row seats that can slide forward or backward, if not tumble out of the way altogether.

Expectedly, cargo space increases when any or both of the rear rows are folded down.

Of course, the more common pickup truck-based SUVs share this ability, and will easily trump the BR-V’s because of their larger dimensions. But here lies another of the BR-V’s key strengths — compactness. On the daily grind across traffic, or when slotting through narrow streets, or when parking between tight spots, the BR-V’s size makes tackling these chores easier. Plus, the car’s lower stance allows for better sightlines all around.

Sitting closer to the pavement also means the BR-V feels more like a sedan to drive. Taking sweeping bends at moderate speeds does not unsettle the car all that much; it may lean to one side, but not pronouncedly so. Honda has struck a nice balance between giving the BR-V some road-holding dynamics and allowing it ground clearance that’s better than what average sedans have. So the BR-V can remain composed on pavement, yet it can also traverse relatively bad surfaces and clear obstacles underneath it in a way its identical twin Mobilio MPV cannot.

– As a model intended for emerging markets — not across the globe in the way the CR-V, and Honda’s other models like the City, Jazz and Civic, are — the BR-V keeps its price low at the expense of refinement. The car’s cabin, while fitted with the usual touch screen panel, smart entry and other niceties, is defined by materials and instruments that appear lower-grade when stacked against those from the global models. There are also more suspension and tire noises that enter the cabin.

Some budget items make it to the car’s tech specs sheet, too. Sticking out are the single-cam engine, rear drum brakes, 16-inch wheels and — get this — a PRNDSL gear shift.

= In a market brimming with choices, the BR-V offers a Goldilocks’ just-right median. — Brian M. Afuang

Bluffer’s Box

Honda BR-V 1.5 S Modulo Price: P1.044 million

Engine: 1.5-liter, inline-four, gasoline; 118hp @ 6,600rpm, 145Nm @ 4,600rpm

Transmission: CVT

Drivetrain: Front-wheel drive

Wheels/Tires: 16 inches, 195/60

Key features: 7.0-inch multimedia screen; multi-information display; controls for rear air-conditioning; hill-start assist; speed-sensing door locks

Rear may not look big, but it can fit two people.

Green with envy

Don’t Drink and Write
By Vernon B. Sarne

Nearly six years ago, in December 2011, I drove the Chevrolet Volt electric-hybrid car on public roads in Switzerland. More than being impressed by the vehicle’s energetic and seamless performance, I was taken by the crisp air that I sliced through as I stepped on the throttle.

Now, I’m not about to say here that green cars are the reason the Swiss breathe cleaner oxygen. That’s largely marketing hogwash. But a random incident at a park pointed me toward the answer: As I left the Volt idling while I took photos of it, an elderly person walked up to me and sternly asked me to kill the engine. Because, you know, incomplete combustion of hydrocarbons is bad for the environment.

It became clear to me that in developed, progressive countries, people actually gave a shit about the air that passed through their nostrils. I imagine they wouldn’t shrug off the sight of a single rickety jeepney chugging along the highway, let alone hundreds of these poison-spewing contraptions. I remember being overcome with envy, because back home Filipino lawmakers would rather obsess over revenge-porn videos than craft meaningful legislation that could make environment-friendlier transportation a reality.

My dissatisfaction was mollified a few months later when, in March 2012, Congress passed House Bill 5460, which proposed incentives for the manufacture and the importation of alternative-fuel vehicles. Incentives, particularly tax breaks, are important in the electric and hybrid car business because, priced as is, green cars are too prohibitive for most car buyers in our market. In fact, according to Toyota Motor Philippines’ Rommel Gutierrez, who is also the president of the Chamber of Automotive Manufacturers of the Philippines (CAMPI), the Japanese automaker has only sold about a hundred units of the Prius in the country since launching the hybrid model in 2009.

And that’s just talking about hybrid vehicles, whose internal-combustion engines in their propulsion system allow them to be registered with the Land Transportation Office. Completely electric vehicles — devoid of power plants that use fossil fuel — cannot be officially documented due to the LTO’s current method of motor-vehicle classification citing engine displacement and fuel type.

Last I heard about the issue was back in January 2013, when our ever-efficient senators passed Senate Bill 2856, or the “Alternative Fuel Vehicles Incentives Act.” In August that year, I was invited by the group of Manny V. Pangilinan to not only check out Meralco’s pilot EV charging station, but to also drive a fully electric Tesla Model S sedan inside the Meralco compound in Pasig City. Behind the wheel of the high-tech (and utterly quiet) car, I entertained thoughts of green motoring finally dawning in Metro Manila. By Meralco’s own computation, an electric car like the Model S could be operated at a cost of just P1.95 per kilometer. I left the event hopeful.

Today, I write this column still hoping. Although one of our admirable solons did later come up with the “Electric, Hybrid and Other Alternative Fuel Vehicles Promotion Act” in 2014, the whole thing seemed to smack of, um, promotion. Today, you still can’t buy an EV in the Philippines, and those hybrids will still bankrupt you.

Thankfully, we might see the day when green vehicles are common and affordable sooner than later, thanks to the efforts of eco-minded individuals led by Electric Vehicle Association of the Philippines (EVAP) president Rommel Juan, who dreams of “less dependence on foreign oil” for his country.

Last week, EVAP, CAMPI and Meralco joined hands in staging the first “ASEAN Electric and Hybrid Vehicle Summit” in Pasay City. Supporting the event were EVAP’s counterparts in Thailand, Malaysia, Singapore and Korea. Looking to “strengthen partnerships for greener transport in ASEAN and beyond,” the organizations signed a memorandum of agreement that would charge the coalition to work together toward fully functional EV infrastructure in the region. The alliance shall be known as the ASEAN Federation of Electric and Hybrid Vehicle Associations.

A big part of the undertaking is generating positive PR for green vehicles and lobbying governments to accommodate them. Which was the whole point of putting together a mini EV exhibit that featured such cars as the Nissan Leaf and the Toyota Prius PHV. Presumably, the organizers wanted to show the public that electrification isn’t exclusive to unsexy tricycles, MPVs and buses — that electric vehicles can have curves and wear psychedelic paint, and be parked inside home garages.

“We intend to pursue more sign-ups from our counterparts in ASEAN countries to give the federation more clout, and for it to live up to its billing as the unified voice of the ASEAN electric and hybrid vehicle industry,” said Mr. Juan in a statement distributed to the assembled media.

Just a small problem, though: The crucial government officials they had invited and hoped to “pressure” (a word that was repeated a number of times during the press conference) didn’t show up and instead sent token representatives. Fingers crossed that this wasn’t an indication of said officials’ disinterest in green vehicles.

You may e-mail the author at vbsarne@visor.ph.

SC upholds martial law declaration in Mindanao

By Kristine Joy V. Patag
Reporter

THE SUPREME Court (SC) on Tuesday, July 4, upheld President Rodrigo R. Duterte’s Proclamation No. 216, placing Mindanao under martial law.

Voting 11-3-1, the SC justices sitting in full court dismissed the consolidated petitions challenging the sufficiency of the factual basis of Mr. Duterte’s martial law declaration.

In a press briefing, SC Spokesperson Theodore O. Te said that 11 justices voted to dismiss the petitions, three justices voted to partially grant the petition, while one justice voted to grant the petition. Mr. Te, however, did not identify how the justices voted, saying this was all he was “authorized to say.”

“All 15 Justices have circulated their respective Opinions, whether concurring or dissenting. All Opinions will be finalized and submitted by tomorrow,” Mr. Te added.

Mr. Duterte, in an ambush interview yesterday while visiting a wake for a massacred family in San Jose del Monte, Bulacan, said he “would give due respect to the opinions, the dissenting (views) questioning the martial law power of the President.”

He earlier warned he would ignore an SC decision against his proclamation and even threatened to jail critics of his proclamation.

Presidential Spokesperson Ernesto C. Abella, for his part, said that with the SC affirming Proclamation No. 216, “the whole government now stands together as one against a common enemy.”

Clashes between the government forces and pro-Islamic State (IS) Maute militants broke out in Marawi City on May 23, triggering one of the biggest internal security crises in the Philippines in years.

Following the clashes, Mr. Duterte placed the entire Mindanao and its islands under martial law and suspended the privilege of the writ of habeas corpus there. He said this was to foil what he said was Maute’s plan to establish a caliphate for IS in Marawi.

But the fighting has dragged on for six weeks and only two weeks remain for martial law’s effectivity.

Three groups of petitioners — composed of lawmakers, residents of Marawi City and human rights groups — challenged before the SC the “sufficiency of factual basis” of Mr. Duterte’s Proclamation No. 216, as held under Section 18, Article 7 of the 1987 constitution.

The current Constitution contains safeguards on martial law such as limiting its enforcement to 60 days and allowing the high court and Congress to review the proclamation.

This is to prevent a repeat of the abuses under the late dictator Ferdinand E. Marcos, who detained his critics during his martial rule and used this to stay in power for another 14 years. Mr. Marcos was overthrown in 1986 by a People Power revolution led, among others, by the PDP-Laban, Mr. Duterte’s own party.

The SC, for the three petitions, held a three-day consecutive hearing via oral arguments on June 13 to 15. Solicitor General Jose C. Calida, who represented the named government officials as respondents, issued a statement minutes before the SC made its official announcement.

Mr. Calida said the SC’s dismissal of the petitions is a “monumental decision,” as it “underscores the existence of a real and present rebellion that threatens the lives of our fellow Filipinos in Mindanao, and their much-cherish liberties.”

He further extended his gratitude to the high court “for allowing [Mr.] Duterte to perform his prime duty of protecting the Filipino people,” adding: “As the conscience of our nation, the [SC] did not sit idly to watch our country get dismembered.”

Armed Forces of the Philippines (AFP) Chief General Eduardo M. Año, who appeared before the high court on the third day of its hearing, said in a statement that the military forces “[take] this (decision) as a vote of confidence that we are doing what is right and what is necessary for the restoration of the rule of law, peace and order in the whole island.”

“The mission is not yet done but we can assure our citizens that we are focused and determined to carry on the fight (un)til peace and order in Mindanao is fully restored and the liberation of Marawi is achieved at the soonest possible time,” Mr. Año added.

Petitioner Renato Reyes, who is also Bagong Alyansang Makabayan (BAYAN) secretary-general, told reporters he was not surprised with the decision, but warned the “SC has only made it easier to declare martial law all over the country. They made it easier to commit human rights violations in many parts of the country.”

“This is a bad omen that militarists and the President will be more emboldened to continue martial law beyond 60 days, and it’s possible that this would be imposed all over the country,” Mr. Reyes added.

Vice-President Maria Leonor G. Robredo, in a statement, said the decision was an “important component of the mandated checks and balances to martial law.” She added, however, that, “We expect that Congress will likewise fulfill its Constitutional duty to review, on behalf of the people, the declaration of martial law in Mindanao.”

Some senators also called for vigilance on Mr. Duterte’s proclamation, especially as the 60-day period imposed by the Constitution is about complete.

Senate Minority Leader Franklin M. Drilon, in a statement, noted, “But what is more important today and in the next 17 days is how to end the fighting in Marawi which has already claimed the lives of many of our soldiers, displaced thousands of residents, and disrupted all forms of human and economic activity in the area.”

“Immediate and effective aid must come to the people of Marawi and I call on our government to immediately prepare a long-term rehabilitation plan that will bring normalcy back to the affected areas,” Mr. Drilon said, adding, “I urge the Senate leadership to ask the Executive for an update on the situation in Marawi.”

Senator Paolo Benigno A. Aquino IV, for his part, said: “Let’s focus on giving displaced Filipino families the support they need and be ready to pour all efforts to rebuilding Marawi, reestablishing our schools, and creating jobs and livelihood for the community.”

Mr. Duterte’s proclamation ends on July 23, the eve of his second State of the Nation Address (SONA).

Senator Ana Theresia “Risa” Hontiveros-Baraquel also backed Mr. Reyes’s fear that the SC decision “sets a dangerous precedent for undemocratic governance.”

“Lest we forget, bad precedents stem from seemingly justifiable measures. With the ruling, martial law becomes the “default response” of the state to address all acts of violence and lawlessness,” Ms. Hontiveros said.

The SC has yet to rule on two other petitions filed against Proclamation No. 216 and seeking to compel Congress to convene and deliberate on the declaration.

Mr. Calida in his comment on the said petitions — filed by former solicitor-general Florin T. Hilbay and ex-senator Wigberto E. Tañada — said: “The Constitution only provides for the conduct of ‘voting jointly’ and only for the purpose of revoking or extending the proclamation or suspension.”

Senator Joel T. Villanueva, for his part, said in a mobile phone reply to BusinessWorld that the “request for extension should come from the President.”

“We will be ready to assess and make that decision if there’s really a need to extend the declaration on [martial law],” Mr. Villanueva added.

Senator Joseph Victor G. Ejercito in his text message, when sought for comment, said he “will suggest that defense and security officials brief the Senate before the 60-day deadline, so that we’ll have a better grasp of the situation.” — with Ian Nicolas P. Cigaral, Jil Danielle M. Caro, and Raynan F. Javil

Senate body to investigate anti-drug police

A SENATE committee will investigate police actions after a Reuters report detailed how officers have used hospitals to cover up executions in President Rodrigo R. Duterte’s year-old war on drugs, the committee’s head said on Monday.

The Reuters article, published on Thursday, detailed how police have been sending corpses of drug suspects to hospital after they were killed in anti-drug operations. Witnesses and family members said the suspects were executed and their bodies removed in a police cover-up.

Interviewed for the article, Metro Manila Police Chief Oscar Albayalde promised to investigate the findings, which were based on eight months of official crime data and interviews with witnesses, family members, doctors and police.

Philippine National Police (PNP) Chief Director-General Ronald M. dela Rosa, who declined to be interviewed for the piece, challenged its contents on Friday and said police are not medically qualified to determine whether a victim is dead or alive. A spokeswoman for Reuters said the news agency stood by its reporting.

On Monday, responding to an opposition call for an investigation of Reuters’ findings, the chairman of the Senate Committee on Public Order and Dangerous Drugs told Reuters there would be an inquiry.

“I will conduct an inquiry basically because there are witnesses named in the Reuters report,” added the chairman, Senator Panfilo M. Lacson, Sr. Witnesses are invited to testify under oath.

The Senate is small, with only 24 seats, but its members are influential. The Senate has also been home to Mr. Duterte’s fiercest critics.

Since the drug war began, senators have grilled top police officers and former hitmen in often sensational televised hearings that have enraged Mr. Duterte and mesmerized millions of Filipinos.

There was no immediate response from Mr. Duterte’s office to the Senate move.

The Reuters report, based on data from two of Metro Manila’s five police districts for the first eight months of the drug war, showed that of 301 victims sent to hospital after police anti-drug operations, only two survived. The rest were dead on arrival.

In July 2016, the first month of the drug war, there were 10 dead-on-arrival cases, or 13% of police drug-shooting deaths. By January 2017, the tally had risen to 51 cases, or 85%.

A police commander who spoke to Reuters on condition of anonymity said the increase was not a coincidence and police were trying to prevent crime-scene investigations and media attention that might show they were executing suspects.

In a three-page resolution calling for an inquiry, opposition Senator Antonio F. Trillanes IV also cited an earlier Reuters report that described how police were paid to kill drug suspects and plant evidence. A police spokesman at the time called the payment claim “implausible.”

No date has been fixed for the inquiry. The Senate resumes at the end of July.

Meanwhile, Mr. Dela Rosa on Tuesday said he wants to recall all Special Action Force (SAF) members assigned to the New Bilibid Prison, following Justice Secretary Vitaliano N. Aguirre II’s remarks on Monday about the revival of the drug trade there.

“I want to recall also because of them, their apprehension. Our names might be damaged here. The drug trade will continue and we cannot control, our names will only be damaged, you better relieve us here,” Mr. Dela Rosa said.

“We do not totally deny that,” he said of Mr. Aguirre’s claim. “We are not washing our hands.”

Mr. Dela Rosa also said he has already talked with Chief Supt. Benjamin M. Lusad, SAF director, regarding his plans to recall the troops.

“I have talked to the SAF director. Even them, they want to be recalled from there because they have no complete control over the Bilibid drug lords, right? Before, the Bilibid drug lords were in Building 14, guarded by SAF. Now, they were transferred to the maximum (security facility),” Mr. Dela Rosa said.

“The SAF now guards Building 14 and the maximum. But there are also drug lords transferred to the medium. I just don’t know about the minimum,” he also said.

“We just want the public to know that we do not totally manage the Bilibid. The only areas guarded by the SAF are the maximum and Building 14. If the drug lords were transferred to the minimum, the SAF no longer has control over them. If there are gadgets such as cellphones and laptops that slipped, the SAF will not know about them because they no longer have control,” the PNP chief added.

In a related development, the notorious prison gang Sputnik has surrendered illegal drug paraphernalia, following Mr. Aguirre II’s disclosures on the drug trade at Bilibid.

Bureau of Corrections (BuCor) Director-General Benjamin C. delos Santos said the “Sputnik group of Quadrant 3 voluntarily surrender[ed] 31 pieces plastic sachet of suspected shabu” on the morning of July 3.

In a message relayed through Justice Undersecretary Erickson H. Balmes, Mr. Delos Santos said the surrender of drugs was “as a result of the dialogue/negotiation conducted last Saturday.” — Reuters, with Jil Danielle M. Caro and Kristine Joy V. Patag

OFWs to be aided by new, multipurpose ID

By Ian Nicolas P. Cigaral, Reporter

OFWs to be aided by new, multipurpose ID LABOR SECRETARY Silvestre H. Bello III on Tuesday, July 4, said the overseas employment certificates (OECs) for Filipinos working abroad will be replaced with a universal identification card that can be used for government transactions and eventually as a passport.

In a press briefing at Malacañang, Mr. Bello said “all bona fide” overseas Filipino workers (OFWs) will be given an ID called iDOLE or “ID of the Department of Labor and Employment,” which they could also present at the airport to skip paying travel tax and terminal fee.

The initiative is one of the major priorities of the Duterte administration as many OFWs had long complained about the difficulty and long queues in obtaining OECs whenever they have to return home or fly back to their workplaces abroad.

According to Mr. Bello, Filipino expats could also use the iDOLE for their Social Security System, Pag-Ibig (Home Development Mutual Fund), and PhilHealth transactions, adding that his department, together with President Rodrigo R. Duterte, would launch the program on July 12.

“That (iDOLE) to me is a major gift of the President to our OFWs who we always call as the ‘bagong bayani,’” Mr. Bello said.

Mr. Bello said DoLE would also coordinate with the Department of Foreign Affairs (DFA) and the Department of Justice (DoJ) to explore a system that would allow iDOLEs to be eventually used as passports by OFWs.

“That will be through diplomatic channels,” the Labor chief said.

Data from the Philippine Statistics Authority show that an estimated 2.2 million Filipinos work abroad from April to September 2016, with Saudi Arabia being their leading destination.

Other preferred workplaces are the United Arab Emirates (15.9%), Europe (6.6%), Kuwait (6.4%), and Qatar (6.2%).

Money sent home by OFWs totaled $2.083 billion last April, 5.9% lower than the $2.213 billion last year and down a fifth from the record-high $2.615-billion inflow seen in March.

In a statement, the Bangko Sentral ng Pilipinas attributed the drop in remittances to the repatriation of workers under Saudi Arabia’s 90-day amnesty program for undocumented foreigners.

Duterte reappoints 4 Cabinet officials

PRESIDENT Rodrigo R. Duterte has reappointed four Cabinet officials who were bypassed by the bicameral Commission on Appointments (CA).

Mr. Duterte signed the appointment letters of Agrarian Reform Secretary Rafael V. Mariano, Environment Secretary Roy A. Cimatu, Health Secretary Paulyn Jean B. Rosell-Ubial and Social Welfare Secretary Judy M. Taguiwalo on June 1, but released only by Malacañang on July 4.

To recall, the CA was not able to confirm the ad interim appointments of Ms. Taguiwalo, Mr. Mariano, and Ms. Ubial when Congress went on recess last month, while Mr. Cimatu has yet to face the powerful commission.

Meanwhile, Mr. Duterte’s vice-presidential running mate and former senator Alan Peter S. Cayetano was confirmed by the CA last May as new Department of Foreign Affairs (DFA) Secretary within minutes after session opened.

Congress reconvenes on July 24 for its Second Regular Session, with Mr. Duterte delivering his second State of the Nation Address. — Ian Nicolas P. Cigaral

House withholds show-cause order vs ‘Ilocos 6’

By Raynan F. Javil, Reporter

THE House of Representatives has withheld the issuance of a show-cause order against justices of the Court of Appeals (CA) who granted the petition of writ of habeas corpus on the so-called ‘Ilocos 6.’

Surigao del Sur Rep. Johnny T. Pimentel said in an ambush interview yesterday that they have filed a motion for inhibition against justices of the CA Special Fourth Division and they will wait for a resolution on their pleading.

“Kung naalala niyo (If you remember), I already signed the show-cause order (as to) why they should not be cited for contempt. But considering that on June 29, we filed for a motion for inhibition, so we would just await muna (first) if the three justices will inhibit,” Mr. Pimentel said in an ambush interview.

Mr. Pimentel chairs the House committee on good government and public accountability, which is conducting a congressional probe on the alleged irregularities on the purchase of minicabs, buses and trucks amounting to P66.45 million using the Ilocos Norte tobacco excise-tax collection share.

Six Ilocos Norte officials remain detained at the House of Representatives since May 29 as they were cited in contempt for giving “dismissive answers” during the previous hearings bythe committee.

The six officials petitioned the appellate court for a writ of habeas corpus, which the court granted. But the House ignored the order and instead issued a show-cause order against the three justices of the CA Special Fourth Division.

The CA Special Fourth Division is composed of Justices Stephen Cruz, Edwin Sorongon, and Nina Antonio-Valenzuela.

“We hold the show-cause order until such time our motion for inhibition to the justices will be acted upon,” Mr. Pimentel said.

His committee will resume its probe on July 25. The chamber already issued a show-cause order against Ilocos Governor Imee R. Marcos after she skipped the previous hearings.

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