AMRO’S ASEAN+3 GDP growth forecasts
THE ASEAN+3 Macroeconomic Research Office (AMRO) trimmed its Philippine economic growth forecast for this year and in 2025, amid slowing external demand. Read the full story.
Using the 2016 UNCLOS Award as the basis of the Philippines’ Archipelagic Defense Doctrine
The South China Sea is the site for China’s integrated maritime campaign for expansion against its smaller and weaker Southeast Asian neighbors. China aims to gain legitimacy for its unilateral territorial claims over the vast marine terrain, several surface and subsurface land features, and natural resources above and below the seabed. China deploys its three services in its campaign against the coastal Southeast Asia states. The first layer is the People’s Liberation Army Navy (PLAN), with its numerous and advanced naval vessels to provide it with the escalatory option of the threat or actual use of force. The second layer is the Chinese Coast Guard (CCG), which ensures the occasional presence of Chinese maritime forces in the disputed waters. Finally, the People’s Armed Forces Maritime Militia (PAFMM) is tasked with maintaining a persistent presence in the contested maritime terrain of the South China Sea.
The PLAN and the CCG operate to normalize patrol activities to maintain China’s rights and interests in the South China Sea and, if necessary, respond to sudden maritime incidents involving the navies and coast guards of the smaller Southeast Asian states. The PLAN, the CCG, and maritime militias are tasked to promote China’s economic activities in the disputed waters while obstructing the economic activities of its smaller neighboring states. China’s integrated maritime campaign for expansion seeks two objectives: a.) de facto — or the imposition of a state of affairs based on raw power and use of force; and, b.) de jure — earning the legal recognition of China’s sovereignty over the South China Sea through international law.
In 2013, the Philippines filed a case in the Permanent Court of Arbitration (PCA) to deny China the possibility that it could accomplish the second goal of its integrated maritime expansion — the legitimacy of its expansive naval claim in the South China Sea. In 2016, the Arbitral Tribunal on the United Nations Convention on the Law of the Sea (UNCLOS) decided that China’s legal basis for its expansive claim — the nine-dash-line — is a completely untenable claim because it has no basis in international law. The tribunal ruled that since China became a party to the UNCLOS, it could not legally claim to have historic rights in areas beyond 12 nautical miles from its coast. The tribunal further pointed out that there was no evidence to support China’s landmark claim in the South China Sea. By ruling that China’s nine-dash line claim has no legal basis and is groundless, the arbitral court effectively deprived China of any chance to gain de jure control of the South China Sea.
THE UNCLOS AWARD AS THE BASIS OF AN ARCHIPELAGIC DEFENSE DOCTRINE
President Ferdinand Marcos, Jr. said in an interview before his inauguration as president on June 30, 2022 that he would assert the Philippines’ territorial rights over the West Philippine Sea. He said he would talk with China consistently with a firm voice about the two countries’ territorial dispute. He also declared that he would use the July 2016 arbitral awards against China’s expansive and sweeping claims in the South China Sea to assert his country’s territorial rights.
On July 12, 2022, Philippine Foreign Affairs Secretary Enrique Manalo announced that the Philippines would uphold the July 12, 2016, arbitral ruling as it is one of the twin anchors of the country’s policy and actions on the West Philippine Sea. He added that the award affirmed to the community of nations that the rule of law prevails. That stability, peace, and progress can only be attained when founded on a rules-based legal order on the oceans, as it should be everywhere else. In the Department of Foreign Affairs’ (DFA) July 12, 2022 statement commemorating the 6th anniversary of the arbitral award and the 40th anniversary of the United Nations Convention on the Law of the Sea, Secretary Manalo declared that compliance with UNCLOS in its entirety is critical to ensuring global and regional peace and the fair and sustainable use of the oceans.
Since 2023, President Marcos Jr. has pursued a vigorous balancing policy based on the July 12 arbitral ruling to challenge China’s maritime expansion in the South China Sea. Specifically, this balancing policy entails building up the Philippine military’s external defense capabilities, enhancing its alliance with the US by increasing American strategic presence in the Philippines and fostering security arrangements with other American allies like South Korea, Japan, and Australia, and, more recently, adopting the Comprehensive Archipelagic Defense Concept (CADC).
Secretary of National Defense Gilberto Teodoro announced the gist of CADC in January 2024. CADC incorporates President Marcos Jr.’s view that China’s activities aimed to implement its 10-dash line claim (Recently expanded from nine dashes. — Ed.) in the South China Sea is not only a blatant disregard of UNCLOS and of the July 12, 2016, arbitral tribunal ruling, China’s actions are a major strategic threat to Philippine national security. The CADC directs the Armed Forces of the Philippines (AFP) to develop and project its capabilities up to the Philippines’ exclusive economic zone (EEZ) and expand the country’s strategic depth to enhance the defense of its entire archipelagic territory. CADC’s long-term goal is to guarantee the unimpeded and peaceful exploration and exploitation of all the natural resources with the country’s EEZ for Philippine nationals, corporations, and others authorized by the Philippine government. This implies a more comprehensive and defiant strategy against Chinese maritime expansion grounded on the July 12, 2016, UNCLOS award to the Philippines.
Dr. Renato De Castro is a trustee, convenor, and non-resident fellow of the think tank Stratbase ADR Institute. He is also a distinguished full professor at the Department of International Studies at De La Salle University-Manila.
UnionDigital CEO to step down by August
THE PRESIDENT and chief executive officer (CEO) of the digital banking arm of Union Bank of the Philippines, Inc. (UnionBank) will step down by August, its listed parent said on Tuesday.
UnionDigital Bank President and CEO Henry R. Aguda will leave his post effective Aug. 1 after the online lender’s board of directors accepted his resignation, UnionBank said in a disclosure to the stock exchange.
Mr. Aguda will be replaced by Danilo “Bong” J. Mojica II, who is currently a director at UnionDigital.
“Mojica brings with him over 35 years of local and international C-level corporate and consulting experience in various fields and industries, like FMCG (fast-moving consumer goods), airline, telecommunications, financial services and in financial technologies,” the bank said.
“We respect Henry’s decision to pursue opportunities that are more aligned to his personal development goals, and we wish him the best. Our appointment of Bong, who is close to UnionDigital’s business and operations as a board director, will ensure continuity and the uninterrupted execution of the bank’s plans for growth and its strategic initiatives,” UnionDigital Board of Directors Chairman Justo A. Ortiz said.
Mr. Aguda will also leave his post as UnionBank senior executive vice-president, the listed lender added.
“This was also accepted by the UnionBank Board and will be effective Oct. 01, 2024, to allow Aguda to have enough time for an effective turnover and transition to Bong Mojica as UnionDigital President and CEO successor,” it said.
UnionDigital is one of the six licensed digital banks in the country.
Its parent UnionBank saw its net income decrease by 78.06% to P1.98 billion in the first quarter due to one-time integration costs related to its acquisition of Citigroup, Inc.’s consumer business in the Philippines.
The listed lender’s shares went up by 30 centavos or 0.87% to close at P34.80 apiece on Tuesday. — AMCS
SMIC holds fixed-income investor meetings in Asia, Europe for possible dollar note issuance
SY-LED holding company SM Investments Corp. (SMIC) has started a series of fixed-income investor meetings in Asia and Europe on Tuesday for a possible dollar note issuance.
SMIC mandated HSBC, J.P. Morgan, Standard Chartered Bank, and UBS as joint lead managers and joint bookrunners, alongside BDO Capital and Chinabank Capital as joint lead managers, to arrange the meetings, the listed holding company said in a regulatory filing.
“A US dollar-denominated benchmark-sized Regulation S offering of five-year senior notes by SMIC SG Holdings Pte. Ltd. guaranteed by SMIC may follow, subject to market conditions,” SMIC said.
“The notes are expected to be drawn from (SMIC SG Holdings’) $3-billion euro medium-term note programme (EMTN),” it added.
SMIC SG Holdings and SMIC’s legal advisers include SyCip Salazar Hernandez & Gatmaitan for Philippine law, and Latham & Watkins LLP for English law.
The legal advisors of the joint lead managers and joint bookrunners are Picazo Buyco Tan Fider & Santos Offices for Philippine law, and Linklaters Singapore Pte. Ltd. for English law.
SMIC and its listed property developer, SM Prime Holdings, Inc., previously announced the maiden $3-billion multi-issuer EMTN program. It seeks to finance expansion and debt payments. EMTNs are a type of debt security that is issued and traded overseas.
For the first quarter, SMIC logged a 6% increase in its consolidated net income to P18.4 billion as consolidated revenues surged by 4% to P144 billion.
The holding company’s core businesses are in the retail, banking, and property sectors.
SMIC shares closed unchanged at P900 per share on Tuesday. — Revin Mikhael D. Ochave
SoftBank buys troubled UK semicon startup in AI race
SOFTBANK GROUP CORP. has acquired British semiconductor startup Graphcore Ltd., as the Japanese firm seeks to strengthen its investments in chips and artificial intelligence (AI).
The companies announced the deal on Friday without disclosing financial terms. Bristol-based Graphcore will operate as a SoftBank subsidiary and keep its management team, Nigel Toon, Graphcore’s chief executive officer, told reporters in a briefing.
It’s the second UK semiconductor company that SoftBank’s snapped up, and follows its 2016 takeover of Cambridge-based Arm Holdings Plc, the chip designer whose technology is found in almost all of the world’s smartphones. Graphcore was frequently held up as a champion of the UK tech industry — it participated in the country’s inaugural AI safety summit last year. But Mr. Toon has been openly critical of the government’s lack of support for the industry.
Based in Bristol, Graphcore designed a new type of chip, called an IPU, meant to enable AI applications. Financing from marquee investors, including Sequoia Capital, gave the company a $2.8-billion valuation in 2020 on the hopes that it would rival Nvidia Corp. But the British upstart struggled to gain customers, even as the frenzy around AI sent the demand for silicon sky high.
Graphcore brought in $2.7 million in sales on $204.6 million in losses in 2022, according to its most recent filings. The company disclosed that it needed more money to survive. Last year, Graphcore left China, a market Mr. Toon had cited as promising.
Mr. Toon, a semiconductor veteran, cited the unmanageable costs of competing with Nvidia and others developing customized AI chips. “The scale here is just enormous,” he said. “The right outcome for the company is to work closely with a partner that is willing to make these levels of investment to succeed.” He said the plan under SoftBank was to “invest and add” to his employee base in the UK.
“This acquisition is a welcome end to the uncertainty that has faced Graphcore,” UK Science Secretary Peter Kyle said in a statement on Friday. “It must, however, serve as a reminder of the important work that needs to be done.”
Vikas Parekh, a managing partner with SoftBank’s investment fund, said in a statement that SoftBank was “pleased to collaborate” with Graphcore on moving toward AGI, an industry term for a machine that outperforms humans in a range of tasks. The company didn’t comment further. Bloomberg News reported on the companies’ talks in May.
Masayoshi Son, SoftBank’s founder, has shifted his strategy from splashy venture deals to strategic investments in AI and semiconductors, riding the successful public listing of Arm. Mr. Toon said Graphcore will work “across the whole SoftBank family,” without specifying how it would collaborate with Arm.
Before the deal was announced, Graphcore sent former employees letters indicating that their company shares were worthless, according to a report in Sifted and documents seen by Bloomberg News. The letter explained that the offer price was less than the amount it had raised in investment capital.
Mr. Toon confirmed that former employees wouldn’t profit from the sale but declined to comment on the financial terms. He said Graphcore had raised “in the order of $700 million” before being acquired. — Bloomberg News
K-pop group NMIXX breaks fresh ground, teases new music
LONDON — Performing with a live band gave South Korean girl group NMIXX new means to connect with audiences as they brought their “mix pop” sound to the British Summer Time (BST) Hyde Park Festival in London on Sunday.
The main stage performance marked a first for the six-piece, which is made up of members Haewon, Lily, Sullyoon, BAE, Jiwoo and Kyujin.
“When I heard that we were performing in this historical park, like, even just visiting here would have been fun but performing here is so crazy,” Australia-born vocalist Lily said in a post-show backstage interview.
“We honestly don’t have a lot of experience with festivals but this time we were lucky enough to perform with a band,” the 21-year-old singer, said.
“When you’re doing it with a backtrack, you can’t manipulate it as you go. But with a band you can work together and have good synergy and you can kind of slow it down if you want to or make it faster. I think that was an interesting thing that we were kind of all getting used to while preparing for the festival.”
NMIXX made their debut in early 2022 and have since released two extended play records, three single albums, and toured across Asia and the United States.
The group’s track “Love Me Like This” recently surpassed 100 million streams on Spotify, with songs “O.O” and “DASH” closing in on 200 million streams on the digital music service.
The members have also attended European catwalk shows for a Spanish luxury brand, as an increasing number of fashion houses hire Asian stars for their highest-profile global promotional gigs.
Fans will not have to wait long for new music, said the group, who gave audiences at BST a taster of their as-yet-unreleased song “Moving On.”
“We’re working hard to bring out music that’s new and different,” Kyujin said.
“I think you’re going to get a hip mix that we haven’t shown you yet. It’s a little bit more free,” added Sullyoon. — Reuters
IMF’s World Economic Outlook growth forecasts for select Asian economies
THE PHILIPPINES will likely post the second-fastest growth in Asia this year and in 2025, the International Monetary Fund (IMF) said. Read the full story.
Waiver, Release, and Quitclaim by employees: When are they legally binding and when are they invalid?
Will a Waiver, Release, and Quitclaim executed by an employee really forever release and discharge the employer from any action, damages, demands, and any further liability whatsoever arising from employment? Case law tells us that it depends.
Quitclaims, waivers, or releases by employees are generally looked upon with disfavor and are commonly frowned upon by the courts, since they are usually contrary to public policy, ineffective, and are meant to bar claims to an employee’s legal rights. Hence, the Supreme Court established guidelines and standards for determining the validity of quitclaims.
To be valid and enforceable, quitclaims must contain the following:
1. A fixed amount as a full and final compromise and settlement;
2. The benefits of the employees (if possible, with the corresponding amounts) which the employees are giving up in consideration of the fixed compromise amount;
3. A statement that the employer has clearly explained to the employees in English, Filipino, or the dialect known to the employees, that by signing the quitclaim, they are forfeiting or relinquishing their right to receive the benefits which are due them under the law; and,
4. A statement that the employees signed and executed the document voluntarily, and had fully understood the contents of the document, and that their consent was freely given without any threat, violence, duress, intimidation, or undue influence exerted on their person.
In addition, it must be shown that:
1. There was no fraud or deceit on the part of any parties;
2. The consideration for the quitclaim is credible and reasonable; and,
3. It is not contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third party with a right recognized by law.
Thus, to determine whether a quitclaim is valid, one important factor that must be taken into account is the consideration accepted by the employee.
As to what constitutes a reasonable consideration for quitclaims, it was held that if the consideration is equal to, or more than, what the employees are legally entitled to, then the quitclaim is valid and binding, and may not later be disowned simply because of a change of mind.
On the other hand, a quitclaim in which the consideration is scandalously low and inequitable was held to be invalid. This is because an obviously “lowball” consideration in a quitclaim indicates that the employees did not stand on an equal footing with the employer. In such a case, the quitclaim will not bar the employees from demanding the benefits to which they are legally entitled, and the acceptance of benefits therefrom does not amount to estoppel.
Another important factor that must be considered is the voluntariness of the execution of the quitclaim.
In one case, a quitclaim was declared invalid because it did not contain any statement that the employer clearly explained the repercussions of signing the form to the employees — janitors and electricians who badly needed to be apprised of the implications of their actions in view of their low educational attainment. (Jacob v. Villaseran Maintenance Service Corp., G.R. No. 243951, Jan. 20, 2021)
On the other hand, in another case, a quitclaim was held to be voluntarily executed considering that the employee occupied a highly responsible position in the company, and it would be implausible to hold that he could be easily duped into simply signing away his rights. (Radio Mindanao Network, Inc. v. Amurao, G.R. No. 167225, Oct. 22, 2014)
That the employee accepted the consideration due to dire economic needs would not necessarily invalidate the quitclaim, especially if it is not shown that the employee was forced to execute it. “Dire necessity” may only be an acceptable ground to annul quitclaims if the consideration is unconscionably low and the employee was tricked into accepting it. (Arlo Aluminum, Inc. v. Pinon, G.R. No. 215874, July 5, 2017)
That the employee was required to sign the quitclaim as a condition for the release of the settlement pay would also not invalidate the quitclaim since the employer is allowed to take steps to protect its interest and obtain its release from all obligations once it paid the employee his settlement pay. (Radio Mindanao Network, Inc. v. Amurao, G.R. No. 167225, Oct. 22, 2014)
In any case, while a quitclaim is valid for complying with all the above requisites, the claims thereby waived by the employee cannot be deemed to include a claim for illegal dismissal. This is because the legality of an employee’s dismissal is determined by law, and it is the labor tribunals that have the jurisdiction to determine such a case.
While an employee may indeed accept his dismissal and agree to waive his claims or right to initiate or continue any action against his employer, both parties do not have the authority to determine whether such termination is legal or not. This matter cannot be deemed to be covered by a quitclaim.
The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.
April Jane S. Sillada is an associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW), Davao Branch.
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BSP conducts annual Corporate Financial Trends Survey
THE BANGKO SENTRAL ng Pilipinas (BSP) will be conducting the fourth Corporate Financial Trends Survey (CFTS) this quarter, it said on Tuesday.
“The CFTS is a BSP initiative designed to provide a better understanding of the financial conditions of nonfinancial corporations,” the central bank said in a statement.”
The BSP conducts the CFTS yearly to assess the health of the corporate sector as part of its mandate to maintain financial stability.
It will gather granular data on firm-level borrowing activity, profitability, liquidity and solvency conditions, and funding structure and usage.
Other data to be collected are those related to companies’ total assets, liabilities, and equities, sources and uses of funds, currency mismatch, debt-to-equity ratio and its distribution across different sectors, debt by type of financing, debt by type of interest rate and maturity to total debt, distribution of debt by sector and currency, total debt by type of interest rate and currency, hedged exposures, total revenue and net income, and liquidity and profitability ratios.
Data will be collected from 310 enterprises, or 176 micro, small, and medium enterprises (MSMEs) and 134 large enterprises from the 2019 BusinessWorld Top 1000 Corporations, list of Department of Trade and Industry-assisted firms, and the Bureau van Dijk Database.
Questionnaires will be distributed and collected this month until August, and the survey results are expected to be released to respondents in October.
The central bank said it will only use the data collected from each respondent for research and policy formulation, and these will not be made available publicly except under a court order or if approved by the Monetary Board. — AMCS
DoE seeks partners for geothermal risk reduction initiative
THE Department of Energy (DoE) on Tuesday said it is in talks with possible implementing partners to launch its project that seeks to reduce the risks of geothermal power projects in the country.
“We are talking to possible implementing partners,” Energy Assistant Secretary Mylene C. Capongcol told reporters in a Viber message.
Ms. Capongcol said in a recent interview that the DoE is working to de-risk the “most expensive and riskiest” part of geothermal development, which is the exploration phase.
“So part of that is the de-risking tool that we will be using,” she said.
The DoE official said that they will immediately launch the de-risking project once they have found an “ideal” implementing partner.
“Since this is private financing, the general framework involves addressing risks with de-risking tools, [which act] as a sort of guarantee for the project,” Ms. Capongcol said.
The Asian Development Bank (ADB) has initiated a de-risking project to support the DoE’s “continued thrust on the further development of indigenous geothermal energy sources in the country,” according to a briefer.
In August 2022, the ADB and DoE tapped Amala Clean Energy Advisors and its partners, GeothermEx and Parhelion Underwriting (Amala), as the consultants for the implementation of the project.
According to the briefer, Amala was able to finalize reports under the geothermal de-risking project after a series of consultations, meetings, and workshops.
“As observed, geothermal fields that are ready to proceed with drilling will require mobilization of risk (equity) capital, which most developers have struggled with thus far,” the briefer read.
“From the several commonly applied options for addressing this main issue, a cost-shared approach between the public sector and private developers for exploration drilling fits well with the present conditions in the Philippines,” it added.
The entities are proposing a geothermal resource de-risking facility that will “cost-share exploration drilling with qualifying private developers to de-risk geothermal resources at the pre-development stage.”
The DoE is expected to arrange for funding to capitalize the facility with the support of ADB as its anchor partner. — Sheldeen Joy Talavera
Alphabet in talks to buy Wiz in $23-billion cyber deal
GOOGLE parent Alphabet, Inc. is in talks to acquire cybersecurity startup Wiz, Inc., according to a person familiar with the matter.
A deal may be worth as much as $23 billion, said the person, who asked not to be identified discussing nonpublic information. That would make it the tech giant’s largest acquisition to date. An agreement hasn’t been reached and talks could still end without one, the person said.
A representative for Alphabet didn’t respond to requests for comment. A spokesperson for Wiz declined to comment.
Alphabet already owns the cybersecurity firm Mandiant, which it bought for $5.4 billion two years ago in its second-largest acquisition, topped only by its deal for Motorola Mobility Holdings LLC completed in 2012. An acquisition target as large as Wiz would be unusual for a big tech company like Alphabet and may draw even more scrutiny from antitrust regulators.
Google already faces several antitrust challenges, including a lawsuit by the US Justice department accusing it of abusing its dominant position in online search and another one regarding its digital advertising tools.
The Wiz talks, which were previously reported by the Wall Street Journal, come on the heels of Alphabet shelving efforts to acquire customer relationship management company HubSpot, Inc., which Bloomberg News reported last week.
Google shares, which have gained more than 33% this year, rose about 1% to $186.54 at 1 p.m. in New York.
New York-based Wiz connects to cloud storage providers such as Amazon Web Services and Microsoft Azure and scans data stored there for security risks. The company, founded in 2020, was valued at $12 billion during a May funding round that drew investors such as Andreessen Horowitz, Lightspeed Venture Partners and Thrive Capital.
The acquisition of Wiz could help Google catch up to Microsoft Corp. and Amazon.com, Inc. in an increasingly competitive cloud market.
Alphabet has been ramping up investment in its cloud customer business, including offering more generative artificial intelligence tools for clients. Though Google still lags behind Microsoft and Amazon in the market for cloud computing, the company reported that its cloud unit has been profitable in consecutive quarters, after years of the unit being a money-losing operation.
Opportunities are growing in the space as more startups move their apps and data to the cloud, particularly for generative AI purposes. Artificial intelligence tools are trained off of enormous data sets and often require vast amounts of compute power to generate content such as images, marketing campaigns or software code.
An Alphabet takeover of Wiz also stands to intensify Google’s competition against Microsoft, the world’s largest seller of cybersecurity products. Microsoft has been hit with a series of embarrassing hacks that have exposed corporate and government customers in recent years. A US government report blasted the company earlier this year for its failure to stop hackers tied to the Chinese government from pilfering the e-mail boxes of US officials.
Google has been betting Microsoft’s very public cybersecurity failures — along with deep discounts — will persuade corporate and government customers to use the search giant’s productivity software rather than Office. In May, it released a white paper highlighting its rival’s security lapses, and was considering launching similarly themed social media and advertising campaigns.
Google was also offering one free year to government agencies that switch 500 or more users to Google Workspace Enterprise Plus for three years and said they would be eligible for a “significant discount” for the rest of the contract. — Bloomberg News
How PSEi member stocks performed — July 16, 2024
Here’s a quick glance at how PSEi stocks fared on Tuesday, July 16, 2024.
