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SEC names more entities for investors to avoid

THE Securities and Exchange Commission (SEC) cautioned the public against investing in three more entities, which it deemed unauthorized to solicit investments.

In three separate advisories posted on its website, the SEC warned about Moo Farm, Ayn E-Commerce, and Centuros Finance Group II as they do not have the necessary license to sell or offer securities to the public.

Moo Farm allegedly entices people to invest in the platform consisting of eight levels, with the minimum investment at P300 (Cow 1 basic plan) up to P50,000 (Cow 8 master plan), with promised daily earnings of P100 and P50,000, respectively.

Investors are said to automatically get P100 on their Moo Farm account after registering.

“The scheme employed by Moo Farm has the characteristics of a Ponzi Scheme where money from new investors are used in paying fake profits to prior investors and is designed mainly to favor its top recruiters and prior risk takers and is detrimental to subsequent members in case of scarcity of new investors,” the SEC said. 

For Ayn E-Commerce, the SEC said one of the entity’s advertisements claims to offer a daily profit of P1,000 to P5,000 by spending at least 10 to 15 minutes on their platform. The entity is recruiting people seeking part-time employment. 

According to the corporate regulator, the investment activities of Ayn E-Commerce exemplify a tasking and recharging scheme where scammers use false promises, positive reviews, and fabricated testimonies from fictitious people to entice investors that they could earn money by accomplishing an easy task.

The SEC said the organization demands “direct payments and/or membership fees from investors as a prerequisite of getting hired on a part-time basis.”

“The initial earnings received by the investor is simply a deception for him to invest more money. After that, the investor discovers that the recharge services of the entity are absent and he can no longer withdraw his investments,” it added.

Meanwhile, Centuros allegedly encourages the public to invest online in three programs called Alpha, Bravo, and Charlie, which promise a guaranteed profit ranging from 80% to 160%.

“Centuros likewise offers a referral bonus equivalent to 5% of the investment received by the entity from the referrals made by its members. Based on the entity’s representation, the purported source of the guaranteed income offered by the entity to the public comes from its cryptocurrency trading activities allegedly using binance as its platform,” the SEC said. 

“The investment offering by Centuros constitutes selling or offering for sale of unregistered securities in the form of investment contract as the investors are enticed to earn guaranteed profit ranging from 80% to 160% by simply investing their money to Centuros in violation of Sections 8, 26 and 28 of the Securities Regulation Code,” it added. — Revin Mikhael D. Ochave

LANDBANK disburses P2.2B in loans to rice farmers by end-July

BW FILE PHOTO

LAND BANK of the Philippines (LANDBANK) said that it released loans worth P2.2 billion to 13,701 rice farmers and cooperatives in the seven months to July.

In a statement Sunday, the bank said the loans were disbursed from the Expanded Rice Credit Assistance under the Rice Competitiveness Enhancement Fund (ERCA-RCEF).

LANDBANK said that P1.1 billion in loans financed palay (unmilled rice) production for farmers in the Department of Agriculture’s (DA) Registry System for Basic Sectors in Agriculture.

It added that P507.5 million went to cooperatives for relending to its rice farmer-members; while P394.1 million supported rice traders and millers, and P222 million financed the acquisition of farm machinery and equipment.

LANDBANK President and Chief Executive Officer Lynette V. Ortiz said that “the ERCA-RCEF program forms part of our commitment to advance the agriculture sector and empower Filipino farmers.”

It said 4,783 beneficiaries were from Region 2, “particularly the rice-producing provinces of Cagayan, Nueva Vizcaya, and Quirino.”

Additionally, 1,858 were from Region 3; 1,463 from Region 6; 1,334 from Region 13; and 1,323 from Region 4-B.

Under the ERCA-RCEF program, rice farmers are allowed to borrow up to 90% of the project cost, with a 2% fixed interest rate per year.

It said that loans may be used to purchase inputs for rice and rice seed production, machinery and equipment for production and post-production, working capital for rice and seed trading, as well as relending and rediscounting outstanding loans of small rice farmers.

LANDBANK said it will continue to give out P500 million in loans annually to cooperatives and rice farmers in the DA registry who are based in the 38 rice-producing provinces.

It added that the bank fully disbursed its allocated funding for the program between 2019 and 2022. — Adrian H. Halili

BSP orders closure of rural bank in Cebu, tells PDIC to take over

THE BANGKO SENTRAL ng Pilipinas (BSP) has shut down one more rural bank in the country, bringing the number of institutions it has closed this year to seven.

The Rural Bank of Talisay (Cebu), Inc. was prohibited from doing business on Sept. 21 pursuant to Section 30 of the amended Republic Act (RA) No. 7653 or the New Central Bank Act, according to a circular letter signed by BSP Assistant Governor Arifa A. Ala.

The lender was located at Cebu South Road, Tabunok, Talisay City, Cebu.

“The Philippine Deposit Insurance Corp. (PDIC) has been designated as Receiver with a directive to proceed with the takeover and liquidation of the aforementioned rural bank in accordance with Section 12 (a) of RA No. 3591 (PDIC Charter), as amended,” the BSP said.

The PDIC Charter states that a bank placed under liquidation is no longer permitted to resume banking business. Moreover, banks closed by the Monetary Board are no longer to be rehabilitated.

Upon placement of a bank under liquidation, the powers, functions and duties of its directors, officers and stockholders are terminated.

The directors, officers, and stockholders will also be prohibited from interfering in any way with the assets, records and affairs of the bank.

“Therefore, anyone in possession of any asset and/or records of the closed Rural Bank of Talisay (Cebu), Inc. is advised not to allow or honor any transaction affecting the same without the consent of the Receiver and to immediately turn over the said assets and/or records to the designated Deputy Receiver,” the PDIC said.

“Moreover, all assets of the Bank are deemed to be in custodia legis in the hands of the Receiver and may not be subject to attachment, garnishment, execution, levy or any other court processes,” it added.

The Rural Bank of Talisay Inc. is the seventh rural bank closed by the BSP this year.

The regulator shut down the United Consumers Rural Bank, Bangko Pangasinan – A Rural Bank, Rural Bank of San Juan (Southern Leyte), Binangonan Rural Bank, Rural Bank of San Marcelino, and Rural Bank of San Agustin (Isabela). 

Last year, the BSP closed nine rural lenders. These are the Rural Bank of Galimuyod (Ilocos Sur) Inc., Rural Bank of Polomolok (South Cotabato), Banco Rural De General Tinio (Nueva Ecija), Farmers Savings and Loan Bank (Bulacan), Metro-Cebu Public Savings Bank, Rural Bank of Mahaplag (Leyte), Rural Bank of Salcedo (Ilocos Sur), Rural Bank of San Lorenzo Ruiz (Siniloan), and Rural Bank of San Nicolas (Pangasinan).

In 2021, the number of banks closed by the BSP climbed to 13 from just five in 2020.

Central bank data showed there are 3,527 rural bank head offices and branches registered with the BSP as of August. — Keisha B. Ta-asan 

Michael Cinco goes high tech

PHILIPPINE Blockchain Week (think cryptocurrency and Web3) isn’t exactly where you’d expect to see a Michael Cinco fashion show, but that’s exactly what happened on Blockchain Week’s opening on Sept. 18.

The designer opened the event with a grand fashion show called the Metaverse Fashion Gala. It started with an intimation of tech, showing screens descending from the Marriott Grand Ballroom’s ceiling, while a veil separated the backstage and the runway, on which images were projected.

The Filipino-born designer made a name for himself dressing top celebrities like Beyoncé, Jennifer Lopez, Rihanna, Lady Gaga, Mariah Carey, Nick Jonas, James McAvoy, Jason Derulo, Steve Aoki, Carrie Underwood, Sofia Vergara, Mila Kunis, Kylie Minogue, Britney Spears, Christina Aguilera, Ellie Goulding (plus plus). Gowns that he designed for Jennifer Lopez and a host of Bollywood superstars, as well as fellow Filipino Miss Universe Pia Wurtzbach, were on display at the ballroom.

Mr. Cinco opened  the show with a rather expected number of futuristic outfits in black, embellished with mirrors and such; ending with a magnificent black gown with a bubble hemline and a spangled veil.

The second act was a bit more breathtaking, with a collection of white outfits. Of note was a silver sheath beneath a billowing white trailing cape with powerful shoulders, which a model wore and flounced down the runway, taking her time for the audience to savor the spectacle. There were, of course, dresses suggestive of weddings, with several gowns looking as if they were strewn with pearls. A magnificent silver dress moved on the runway and glowed like TV static (itself a suggestion of space and infinity for TV static shows off radiation left over from the Big Bang).

The final act showed outfits in black again, much more tailored than the first set, and the closing dress was a real showstopper. A model was accompanied and helped down the catwalk by two male models, as she was wearing the weight of thousands of crystals on her gown, in different colors, all flashing at the same time. On the dark runway, it scintillated like a galaxy, and as the lights turned on, one saw the vision of the crystal-studded gown, at that point reflecting whatever you want it to.

In a statement, Mr. Cinco said, “Fashion has always been about redefining barriers, and right now, there’s no bigger barrier than taking what’s physical into the digital.”

The gowns had been made available for purchase in a pre-sale, and the collectors took home digital collectibles as well.

In another statement, Dr. Sayed Ali, co-founder and managing director of Michael Cinco Couture, announced the launch of the designer’s first couture ready-to-wear collection, along with a perfume and jewelry line.

“It’s not normal ready-to-wear,” said Mr. Ali. “It’s couture ready-to-wear, with a touch of Michael Cinco Couture, but the price is very affordable.” — Joseph L. Garcia

Life stories of criminals-without-borders

FREEPIK

Constructing life stories is an extremely useful technique in investigating messy and often unintelligible social phenomena for which information is typically fragmented, uneven, piecemeal, hidden, and often inconsistent. It was a practice I learned from the Philippine popular education community, particularly the six-week community leadership seminars run for years by the Education for Life Foundation led by Girlie Villariba and Ed de la Torre. A closer examination of life stories not only offers ways of unpacking puzzles but is also a source of rich, localized knowledge needed for developing inferences on how problems can be restated, and solutions may be created and done differently.

Political scientists Kathleen Thelen and Sven Steinmo said that life stories could illuminate on how “branching processes” evolve and get consolidated, like, for example, the points of departure from established patterns that lead to outcomes that are ultimately shaped and mediated, constrained and refracted, though never solely, by institutions designed and chosen by people. To Filipinos, such constrained and refracted outcomes are captured by the phrase “kapit sa patalim” (literally, hang tight on the knife) and its implied connotations of unorthodox forms of resilience. The British historian Eric Hobsbawm once used the phrase “the ancient politics of Robin Hood” to illustrate how someone officially regarded as a terrorist or criminal may be some other people’s hero.

I once used life stories to find explanations for the kidnapping phenomenon in southern Philippines from the late 1990s to the mid-2000s. In the chapter I wrote for Pancho Lara’s book on the shadow economies of Mindanao, I pieced together the life stories of Lanao warlord Ali Dimaporo; Cotabato-based Moro rebels Abogado Bago, Faisal Marohombsar, and Alonto Tahir; and Basilan-based Moro rebel Julhani Jillang, to draw the inferences that kidnappings were used as a political weapon, to build popular Robin Hood images, and as a criminal enterprise. It is uncanny that I found many parallels with these Mindanao cases when I started compiling and comparing the life stories of drug lords in Myanmar, Afghanistan, Bolivia, and Colombia. To illustrate:

Myanmar’s Lo Hsing Han (1934-2013) was an expert in striking deals. His success lay in carefully balancing relationships with state authorities, whether Burmese, Thai, or Chinese. He turned himself into a resource that they needed. A drug lord just making a profit would simply be hunted down. But a drug lord serving a useful political and financial purpose could become an ally and receive protection. Over time, Lo had a huge impact on the local economy in Myanmar’s opium-producing rural northeast. While often seen as a warlord and armed actor — he was also substantially an agent of capitalism who played a role in monetizing the rural economy and enabling certain rural areas to be connected directly to outside markets. When he died, The Economist called him a “heroin king and pillar of the economy.”

Afghanistan’s Lal Jan Ishaqzai found out how the protection that drug lords receive, despite their deep pockets and leverages, is contingent on many issues that can quickly shift in a constantly changing context. Born in Sangin, Helmand, the most strife-torn district, he controlled the district’s bazaar and levied taxes until he was ousted in 2003 by a tribal competitor who was the main American ally. He retreated to Quetta, Pakistan, but eventually moved to Kandahar under the protection of Wali Karzai, the president’s half-brother. But Wali Karzai was assassinated in July 2011, leading to Ishaqzai’s arrest, conviction, and incarceration at the high-security Pul-e-Charkhi prison funded by the Americans. Embarrassingly for Kabul and the US government, Ishaqzai escaped back to Quetta in June 2013 with the help of his allies in government.

Bolivia’s El Rey de la Cocaina (King of Cocaine), Roberto Suarez Gomez (1932-2000), used his legitimate cattle business and his fleet of small aircraft as the infrastructure for his drug business. Then, he carefully constructed its profitability by being a useful intermediary between key actors while engaging in “ostentatious philanthropy” — he paid for church repairs, paved streets in poor villages, built soccer fields, and sponsored scholars. Suarez’s operations show that the illicit drug trade is much larger than its “big men,” it has vast production, processing, and distribution networks that do not dissolve simply by eliminating those at the top.

The Castaño brothers of northern Colombia — Fidel, Vicente, and Carlos — were the most feared anti-communist vigilantes who not only succeeded in ousting leftist rebels in the Uraba region but started a national paramilitary movement that transformed criminal entrepreneurs into political actors demanding to be heard in peace negotiations. Differences between Vicente and Carlos ultimately led to their downfall, but they can be collectively credited for playing a key role in the consolidation of agricultural commercialization and land speculation in the northern regions.

Lo Hsing Han’s case reminded me of the Remullas of Cavite and the Duranos of Cebu in John Sidel’s classic study on Capital, Coercion, and Crime — local bosses who become tycoons. Ishaqzai reminded me of Norberto Manero, Jr. (Kumander Bucay), who had many unseen protectors in government and who, after his conviction for a most gruesome killing, went almost in and out of prison at will and settled at the prison of his choice — the Davao Penal Colony. Suarez reminded me of tobacco magnate Lucio Tan and the various licit and illicit means he used to build his vast empire. And the Castaño brothers reminded me of the Alsa Masa vigilantes of Davao City.

Three conclusions may be drawn from the life stories of these drug lords. First, they may be considered pioneers of capital, a narco-bourgeoisie, as scholars Nazih Richani and Kendra McSweeney call them, because they are the principal enforcers of a model of local capitalist accumulation in a rural setting. They link rural peasantries to market circuits, provide them with credit, sell their products, and are the force that enables local rural economies to transform into principal illicit crop producers.

Second, they are intermediaries, i.e. brokers and middlemen in economic transactions who display a remarkable ability to switch status — for example, from feared outlaw to beloved patron, or from greedy exploiter to generous investor or employer in collapsing local economies.

And third, they are what academics Ariel Ahram and Charles King call “arbitrageurs” who manage politics and order at the margins of the state and market. To quote Braudel, these authors state how arbitrageurs are creatures of the borderlands where states and empires had difficulty extending their own power. They were “uniquely gifted boundary-crossers, conducting both violent and non-violent transactions across political, economic, and cultural dividing lines.

“The most successful ones turned [out] to have something that everyone else wanted: the ability to serve as middlemen across uncertain boundaries while, in the process, reaping some of the profits for themselves.”

Collectively, these men may be called criminals-without-borders. They come in all shapes and life stories from many countries.

The full discussion of the life stories of these drug lords is in the forthcoming book Rethinking Illicit Economies in Opium and Cocaine: Policy Responses to Drug Crops in the Global South.

 

Eric D. U. Gutierrez has written on corruption, governance, political families, and the conflict in the Muslim areas of Mindanao. Since 2000, he has worked for three international NGOs running programs and policy advocacy in Africa, Asia, and Latin America.

Views on the Vios Cup

PHOTO BY KAP MACEDA AGUILA

The TGR Vios Cup continues to create a significant impact on the industry — and to the people racing the cars

By Dylan Afuang

THE TOYOTA VIOS, a reliable subcompact sedan, is always big news in the local motoring industry.

It has consistently topped sales tallies and, for almost every year for nearly a decade, the sedan has also proven its abilities beyond being an everyday transport while promoting local grassroots motorsports and Toyota’s push for heart-thumping excitement called waku doki.

Through its race-prepped counterparts, the model has done all of the above with what’s now called the Toyota Gazoo Racing (TGR) Vios Cup staged by Toyota Motor Philippines (TMP).

In the Vios Cup’s Circuit and Autocross categories, respectively, professional racing drivers and gearheads, and members of the media and content creators, battle for the podium at Clark International Speedway (CIS), Pampanga.

Held over three weekends every year, the second round of the 2023 TGR Vios Cup happened two weekends ago, welcoming spectators at CIS or through TMP’s social media channels.

Unveiled there were the Hilux GR-S performance pickup truck, the Corolla Altis GR-S HEV as a race car, and the Tamaraw Concept that played the role on safety car. These are just among Toyota’s models that promise to win drivers’ hearts as well as minds.

And as for the Vios race cars, these subcompact pocket rockets certainly made a huge impact on the drivers who are competing this season, too. This time, TMP combined a different group of budding racing drivers with seasoned Vios Cup competitors in both the support Autocross Challenge and the main Circuit Championships.

Especially with the former category, the newcomers come from a variety of professions — media account managers, actors, beauty queens, sportscasters, journalists, and social media influencers.

Autocross racing is an immensely precise type of motorsport, the objective of which is to drive on a tight, winding track bordered by barriers and cones, and to clock the fastest lap. There we were at CIS, accelerating, cornering, and stopping our Vios Cup cars as quickly, as precisely, and as smoothly as the narrow track would permit. We hit a pylon and bade a quick lap time farewell, let alone a place and a trophy on the podium.

While this writer may be all too familiar with this excruciating driving competition, the win and podium places went to more experienced competitors — and even to those competing for the very first time. That feat is a testament to how the Vios Cup, as it provides proper tuition and outlet, can uncover the hidden driving talents of otherwise casual drivers.

And the racing series has championed diversity by way of welcoming more female drivers to the roster. Newcomers Lyka Tan and Pattice Tenorio of Carmudi/ZigWheels Philippines took first and second places, respectively, in their class, with seasoned competitor Mica de los Reyes of The Philippine STAR rounding out the podium.

Men and women of the field, though, can say that autocross racing has made them all more confident and skilled drivers. It has also strengthened bonds, as racing knowledge is shared among participants — along with hearty congratulations for quick lap times and wins, and the stories about the continuing adventure.

There was also no forgetting the focal point of the program.

The race cars for the Circuit race, based on the Vios 1.5 manual models, faced numerous laps around CIS. They underwent high revs, endless gear changes, knocks and bumps with ease during the practice, qualifying, and race laps of the circuit drivers.

Used in the Autocross tilt are CVT models, and they also had to deal with a challenging combination of slow and fast maneuvers, tight corners, and harsh braking and acceleration. Despite all the abuse they’ve endured, the Vios Cup cars remained rock-solid as ever.

The conclusion of the 2023 TGR Vios Cup happens on Nov. 11.

Should you take chances in buying a dream home?

By Bernadette Therese M. Gadon, Researcher

ARE FILIPINOS still willing to take a chance to buy their dream home amid an economic slowdown and high inflation?

Concerns have eased as real estate demand shows no signs of slowing. Analysts noted that it is still every Filipino’s dream is to have their own homes.

To recall, the Philippines’ economic output eased for three straight quarters at 4.3% as of the second quarter as effects of the central bank’s interest rate hikes slowed consumption.

The Bangko Sentral ng Pilipinas (BSP) kept interest rates steady at 6.25% for the fourth straight meeting on Sept. 21.

Inflation picked up in August to 5.3% year on year amid higher prices of food and transport commodities. This ended the six-month easing streak since the 8.7% peak in January.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said that the Filipinos’ experience of forced stay-at-home during the pandemic “sparked heightened interest” in real estate.

“This may have generated increased demand for more space for dwellings and/or alternative living arrangements in the event that we need to lockdown again in the future,” he said in an e-mail interview.

Analysts also attributed the demand in real estate to better labor conditions in the Philippines.

Labor Force Survey (LFS) data from the Philippine Statistics Authority (PSA) showed unemployment rate at 4.8% in July, lower than the 5.2% logged in the same month a year ago.

“The economic reopening helped bolster job creation, which is notable in the current trend we’re seeing in the labor market. With access to jobs, this helped households generate cash flow, which will make credit more accessible if households need or [is] interested in acquiring real estate,” Mr. Mapa said.

In a phone call interview, Joey Roi Bondoc, associate director of Research at Colliers Philippines, said that more employed Filipinos present a “very good backdrop” for the residential sector and investing in your home is still practical despite sky-high interest rates.

“Because in the Philippines, we don’t really have a lot of investment options and properties is one of those that over the past few years has really shown resiliency in terms of capital appreciation potential, or as a source of recurring income,” Mr. Bondoc said.

He also noted that condominium units in Metro Manila have seen a recovery in the primary market, and a rebound in the secondary market, evidence of robust demand this year.

“We are projecting a 2-3% increase in rental prices every year, that’s from 2023 up to 2025. But the problem is that’s still slow because at the height of the pandemic in 2020 to 2021, rents and prices corrected via combined 12-19%.”

Likewise, outside of the capital region, Mr. Bondoc sees sustained demand for house and lot or lots only, showing recovery in the market.

BDO Unibank, Inc.’s (BDO) Senior Vice-President and Consumer Banking Group Home Loan Business Head Angelita C. Manulat said via e-mail that historically, real estate is “one of the most stable long-term investments,” and that they expect a boost in the value of both residential and commercial properties.

According to the BSP’s latest Consumer Expectations Survey (CES), the percentage of households that consider the second quarter as a suitable time to buy a house and lot went up to 22.3% from 19.5% in the first quarter. This was the highest share in 11 quarters or since the 34.3% recorded in the first quarter of 2020.

Considerations to buy a house and lot in the next 12 months rose slightly to 4.7% in the second quarter from 4.6% in the previous quarter.

By type of housing, single detached houses are still majorly considered to buy in the next 12 months by Filipinos at 55.6%, with more than half of the households consider buying a house within P450,000 and below.

In an e-mail interview, the BSP said that the universal and commercial banks (U/KBs) and thrift banks’ (TBs) real estate exposure (REE), composed of real estate loans (RELs) expanded by 5% year on year to P3 trillion as of end-March.

RELs went up by 4.6% to P2.57 trillion as of end-March, slower than the 7.3% growth in end-March last year.

Commercial real estate loans (CRELs), which is almost two-thirds of total RELs, increased by 4.6% to P1.62 trillion, slower than the 6.9% in the same period a year ago.

However, residential RELs (RRELs), which hold 36.9% share of the total, slowed by 4.6% to P950.1 billion from 8% in end-March 2022.

On the other hand, nonperforming REL ratio eased to 4.1% as of end-March 2023, lower than 4.2% in the fourth quarter last year, and 5% from the same quarter a year ago.

“The continuous growth in both CRELs and RRELs reinforces the upbeat outlook of industry experts that the property market is on its path to recovery,” the BSP said.

As of first quarter this year, residential real estate price index (RREPI) showed overall house prices picked up by 10.2% from 5.7% in the same quarter a year ago.

Single detached houses grew by 17%, a turnaround from 2.3% drop in first quarter 2022.

In a separate e-mail, Pag-IBIG Fund Deputy Chief Executive Officer for Home Lending Operations Benjamin R. Felix, Jr. said that according to their latest data, the Philippines’ housing backlog stands at 6.5 million housing units, backing the demand for housing despite trying times.

Pag-IBIG supplied stimulus packages such as special rates on its home loans, and P10 billion financing for qualified developers to address these backlogs.

“We believe that the demand for housing will always be present, as part of our culture as Filipinos is to dream of owning a home for ourselves and our families,” Mr. Felix said.

LAYING THE FOUNDATION
To entice Filipinos to finally take that step to buy their own house, Colliers’ Mr. Bondoc said that developers offer bundle promos that includes either a parking space for condominium units, or appliances for housing units, and implement various payment schemes such as extended down payments to cater to diverse Filipinos.

“The problem with banks is they have not really reduced their mortgage rates, so what we have seen is more aggressive partnerships between banks and the developers,” he said, adding that with the policy rate not declining, banks are tied at this point and could not reduce mortgage rates.

Since 2018, the BSP put in place the Uniform Loan and Mortgage Agreement and its Supplemental Terms and Conditions Templates for Real Estate Mortgages which makes comparison in different lending institutions easier for borrowers.

In addition, to aid in making these dreams come true, financial institutions have offers to make housing financially easier.

Ms. Manulat said that BDO made measures to make housing loan with them better such as providing flexible payment terms of up to 25 years for ease of payment of monthly amortizations and a built-in mortgage redemption insurance and fire insurance, payable in 12 equal monthly payments at 0%.

Additionally, BDO has light payment options, affordable cash out, and fast and easy processing for its clients.

“We take to heart our mandate to provide our members with affordable home financing. That is why Pag-IBIG Fund’s interest rates on its home loans remain low, despite the relatively high interest rates prevalent in the home mortgage industry,” Mr. Felix said.

Pag-IBIG has adapted a lower interest of 6.25% per annum under a three-year repricing period from 6.375%. Interest rate cuts have also been implemented on the five, 10-, 15-, 20-, 25-, and 30-year repricing periods to 6.5% (from 6.625%), 7.125% (from 7.375%), 7.75% (from 8%), 8.5% (from 8.625%), 9.125% (from 9.375%), and 9.75% (from 10%), respectively.

Furthermore, only Pag-IBIG offers the longest repayment term of up to 30 years, compared with the maximum 20-year loan period offered by most home mortgage entities.

“With our fiscal standing strong, we have been able to effectively fund the high demand for our home loans without the need to borrow from the market. As a result, we are able to keep our rates low,” he added.

To protect borrowers from getting buried in interests, Pag-IBIG offers interest rebates for loans paid in full before its original term, as well as adding penalties only on unpaid dues to keep missed payments affordable for members.

“Another feature that is almost always overlooked is the low insurance premiums on the Mortgage Redemption Insurance (MRI) and Fire and Allied Perils Insurance of our home loans at P0.225 for every P1,000, [which] means a P1-million loan will have a monthly insurance premium of only P225, about a quarter of the insurance fees that other financial entities charge for their loans,” Mr. Felix said.

With Pag-IBIG’s mandate to invest at least 70% of its investible funds in housing, the agency is currently on the lookout for socialized housing units to address the housing needs of minimum-wage earners and to spread housing development across all regions in the Philippines.

“This is why we continuously collaborate and create policies in consultation with housing developers, local government units, and other organizations to accelerate housing development under sustainable communities to provide homeownership opportunities for all our members, particularly in the socialized housing segment,” Mr. Felix said.

OUTLOOK
For the rest of the year, analysts are expecting the demand and recovery trend to continue for real estate despite headwinds.

“One headwind really is the interest rate. If it will remain high, then it might clip the recovery of the residential market,” Mr. Bondoc said.

It’s important to monitor interest rate policies because once the BSP cuts its policy rate, it will signal the reduction in mortgage rates, enticing more Filipinos to acquire residential units.

The effects of global economic crisis should also be monitored, Mr. Bondoc noted, as it will affect the inflow of remittances and deployment of overseas Filipino workers (OFWs).

BDO’s Ms. Manulat cautioned the sector on the impacts of natural calamities as well as it could affect pricing of properties in general.

The central bank said to keep in mind of government policies and legislation, such as tax incentives, deductions, and subsidies that could either boost or hinder demand for real estate.

Most importantly, analysts remain vigilant of the country’s economic performance in the coming months.

With the slower growth seen in the second quarter, worries of the Philippines not achieving its growth forecast of within the 6-7% range this year might dim demand in housing and could potentially spill over in 2024.

However, Pag-IBIG’s Mr. Felix is optimistic on real estate growth as overall outlook remains vibrant and institutions are ready to support housing needs.

“This is primarily due to the increase in economic activity brought about by the lifting of public health emergency, the increasing appreciation of young professionals in the value of real estate, and the demand to be driven by the 4PH Program (Pambasang Pabahay para sa Pilipino Program),” he said.

He also added that Pag-IBIG’s programs to stimulate the housing industry is a way to promote economic growth as it provides support to many industries and Filipino workers that could also empower them to secure home financing.

“And while we own more than a third of the share of the total home mortgages in the country, we need the active and strong participation of financial entities and banks to address the home financing needs of Filipinos,” Mr. Felix said.

“Overall, I think what’s positive in the market is owning a residential unit is aspirational for a lot of Filipino households. While you see prices still increasing, Filipinos will definitely find a way to own a piece of property, to own their dream home, whether it’s a condominium unit or a house and lot unit outside of the Metro Manila,” Mr. Bondoc said.

Appellate tax court grants 3M Philippines’ refund

CTA.JUDICIARY.GOV.PH

THE Court of Tax Appeals (CTA) has granted the appeal of 3M Philippines, Inc. to cancel P37.29 million of its deficiency taxes for the year 2014 and to refund P13.4 million from the same assessment it had paid in 2018.

In a 26-page decision dated Sept. 19, the CTA Special First Division said the firm was not liable to pay the taxes since the revenue officers who conducted the audit were not authorized through a letter of authority (LoA).

The officers were only assigned to assess 3M Philippines’ books of accounting through memorandums of assignment, which the tribunal said could not replace an LoA.

“Ergo, the absence thereof (of an LoA) taints the whole examination process and resultant tax assessments issued against petitioner (3M Philippines) covering said year (2014) with invalidity,” CTA Associate Justice Marian Ivy F. Reyes-Fajardo said in the ruling.

The commissioner of internal revenue (CIR) argued that the tax assessment had a legal basis and was discussed in depth in the assessment notices and letters of demand issued to the firm.

Under the Tax Code, only the CIR or his duly authorized representative may authorize an examination of a taxpayer’s tax liabilities. Revenue officers can only perform audits and assessments through a letter of authority issued by the CIR.

The tax court ordered the CIR to refund the P13.4 million, which was paid by the firm on April 20, 2018, since the taxes were illegally collected and were not appropriately audited.

The Bureau of Internal Revenue (BIR) and its agents were also barred from collecting 3M Philippines’ taxes for 2014.

The law defines illegally collected taxes as those collected without “statutory authority, or upon property not subject to taxation or by some officer [who] have no authority to levy the tax.”

The 2014 assessment covered the firm’s deficiency income tax, expanded withholding tax, withholding tax, final value-added tax, and accompanying penalties.

3M Philippines is the Philippine branch of an American multinational conglomerate engaged in the manufacturing and distribution of industrial products.

“Therefore, we declare the deficiency tax assessments covering the taxable year 2014 as void, for being a product of illegal audit and examination by respondent’s tax agents,” the tribunal said. — John Victor D. Ordoñez

Rice inventory declines in early June; corn stocks edge up

THE rice inventory declined 18.1% year on year, while that of corn rose 1.5% at the start of June, the Philippine Statistics Authority (PSA) said.

In a report, the PSA said that the rice inventory during the period was 1.82 million metric tons (MT), with holdings of households, commercial warehouses and the National Food Authority (NFA) all declining.

“As of June 1, about 48.7% of the total rice stocks were from the households, 46.6% were from the commercial sector, and 4.7% were from NFA depositories,” it said.

Household rice, dropped 15.7% to 885 thousand MT, while commercial warehouses held 848.11 thousand MT, 14.8% lower from a year earlier.

Rice held by the NFA amounted to 85.1 thousand MT, down 51.5% year on year.

On a month-on-month basis, the rice inventory fell 3.4% from May.

“Rice in the NFA depositories and household sector registered a monthly decrease of 15% and 11.0%, respectively… While (an) increment of 7.6% was noted in the rice stocks held by the commercial sector,” the PSA said.

Meanwhile, the PSA also said the corn inventory rose 1.5% year on year to 886.46 thousand MT during the period.

“Corn inventory in the household sector increased by 30.5%, while corn stocks from the commercial sector recorded an annual decline of 1.1%,” it said.

Corn held by commercial establishments was 791.96 thousand MT, accounting for 89.3% of the total.

Household corn, on the other hand, rose to 94.5 thousand MT, or 10.7% of the total.

Compared to a month earlier, the national corn inventory rose 32.6%.

“Corn stocks from the commercial and household sectors as of June 1 exhibited monthly growth of 35.4% and 12.9%, respectively,” the PSA said. — Adrian H. Halili

Developing the fashion industry by improving business skills

Young designers also get to show their style at PHx Station pop ups

YOU CAN make a dress, but can you sell it? A series of talks in November aims to equip fashion designers with business skills — just enough to get themselves launched worldwide.

The PHx Fashion Conference will be held on Nov. 17 to 19 at the Ayala Museum in Makati. The talks will include sessions and workshops about fashion business strategies. The conference will feature designer conversations, sessions on the best practices in the international fashion trade, a talk on brand identity and intellectual property, plus other topics intended to help fashion brands kick-start their journeys to adopting elevated standards.

Furthermore, PHx is also holding PHx Station, a three-month popup which introduces the clothes made by young designers Alexie Nethercott, Aire, Apara, Bagasáo, HaMu, Idyllic Summers, Jerome Lorico, Jill Lao, Jude Macasinag, Kelvin Morales, Le Ngok, Liliana Manahan, Neil Felipp, Nicolo, Novel, Randolf, and Renz Reyes, among others. PHx Station is also collaborating with fashion schools College of St. Benilde, iAcademy, and SoFA, wherein a fashion student selected from each school will have the opportunity to present their collections at each batch of PHx Station. PHX Station will run from October to January 2024 at Greenbelt 5.

Back to the conference: Paris-based Filipino-British designer Norman René de Vera will open it. Mr. De Vera, who started his global fashion journey at the London College of Fashion, previously worked with Celine, Louis Vuitton, Lanvin, Versace, and Calvin Klein. He is currently the design and image director for French legacy brand AZ Factory. Meanwhile, TFC Press founder Philippe Terrien and his wife, former fashion editor Giselle Go, will hold talks on business development and other related topics, considering collaborations TFC Press has done with brands like Dries Van Noten, Aesop, Carven, Emilio Pucci, and Courrèges (not to mention developing their own skincare line). Select participants will also have their portfolios assessed and reviewed by TFC Press.

Trickie Lopa, PHx co-founder, told BusinessWorld during the event’s press launch on Sept. 12 in Makati, “We realized that the whole point of the PHx group is really to propel these fledgling fashion labels to operate at a global standard,” she said.

On that note, creatives (like fashion designers) aren’t exactly known to be very good in business. Designer Seph Bagasao, also a co-founder of PHx, said, “It’s not very common for creatives to handle their business, but it will help to know the basics, and that’s something you impart to your team.”

PHx co-founder Esme Palaganas explained to BusinessWorld why they started the conferences (the first series was held in 2019, focusing on making it in Japan): “We felt like this kind of information we’re exchanging; it needs to be out there. We had our own struggles before.”

By developing more fashion designers, Ms. Palaganas hopes to create a more vibrant clothing ecosystem. “The Philippine fashion industry isn’t just defined by one name, or three names. To be an industry, you have to have a lot of names. That’s healthier for us.”

Follow www.facebook.com/phxfashionconference for more details on registration and other announcements. — Joseph L. Garcia

Fighting for our coral reefs

PHILIPPINE COAST GUARD/PHILSTAR GLOBAL

There were gushing descriptions and awesome pictures of bountiful marine life in the National Geographic magazine of May 12, 2022, that featured the coral reefs in the Philippines. Tubbataha Reefs, a national park and UNESCO World Heritage site in the center of the Sulu Sea, has been slowly revived after it was all but destroyed by blast fishing in the 1960s. But how can coral reefs be preserved at a time not just of increasing exploitation but also of human-driven changes in the very ocean itself, the magazine asks? Warming seas, acidifying seas, rising seas — these are the darker shadows that fall across the world’s coral reefs. The most diverse ecosystem in the ocean — a planetary feature for 240 million years — will start to disappear. “It is projected that by 2050 more than 90% of the global Coral Triangle’s reefs will be critically threatened by climate impacts,” the magazine warns.

All the gushing turns to dread for the severely exploited and damaged coral reefs. The West Philippine Sea has an estimated 4,640 km2 or 464,000 hectares of coral reef (based on the CARE-CaDRES Report 2019). The Philippines is believed to have the third largest reef area and the most diverse coral reefs in the world.

Why are coral reefs important? The US National Oceanic and Atmospheric Administration (NOAA) tells us that coral reefs are some of the most diverse ecosystems in the world. Because of the diversity of life found in the habitats created by corals, reefs are often called the “rainforests of the sea.” About 25% of the ocean’s fish depend on healthy coral reefs. Reef ecosystems can support more than 7,000 species of fish, invertebrates, plants, sea turtles, birds, and marine mammals.

“The Philippines is one of the world’s 18 mega-biodiverse countries — the archipelago contains two-thirds of the earth’s biodiversity and between 70% and 80% of the world’s plant and animal species. It is home to 505 coral species and 915 reef fish species. The country is the world’s third most coral-rich area after Indonesia and Australia” according to the Convention on Biological Diversity (bworldonline.com, June 29, 2018).

A square meter of a healthy coral reef produces one to five kilograms of white sand per year, making reefs an even more vital component of coastal tourism. And since coral reefs are natural wave breakers, they protect coastal communities from tidal waves, strong currents, and storm surges (philchm.ph). They protect coastlines from storms and erosion, provide jobs for local communities, and offer opportunities for recreation. They are also a source of food and new medicines. Over half a billion people depend on reefs for food, income, and protection. Fishing, diving, and snorkeling on and near reefs add hundreds of millions of dollars to local businesses. The net economic value of the world’s coral reefs is estimated to be nearly tens of billions of US dollars per year. These ecosystems are culturally important to indigenous people around the world (noaa.gov).

The Philippines is aware of the threats to its coral reef ecosystem, but more to protect its fisheries, the National Geographic article candidly says. If the corals die, fish will have no sanctuary wherein to spawn. Since the 1970s, community-managed marine protected areas (MPAs) have been set up as reserves (no-fishing areas) so as not to disturb and damage the coral ecosystem. Municipalities have jurisdiction over their coastal waters out to 15 kilometers and local fishermen freely enjoy the spill-over fish from the MPAs. Most of the Philippines’ more than 1,600 MPAs are small and locally managed, but enforcement is uneven according to the magazine’s evaluation. More than a million fishermen depend on the country’s coral reefs, but today 54% of the reefs are badly damaged (oceana.org, May 22, 2017).

PHILIPPINES-CHINA TENSIONS
The Philippines-China tensions in April 1992 were sparked by illegal fishing and damaging the reef-sanctuaries in the Philippines’ exclusive economic zone (EEZ). A Philippine Navy surveillance plane spotted eight Chinese fishing vessels anchored in the waters of the Scarborough Shoal. The Filipino inspection team that boarded the fishing ships claimed that they discovered illegally collected corals, giant clams, and live sharks. They attempted to arrest the Chinese fishermen but were blocked by Chinese maritime surveillance ships — it was a stand-off (Philippine Daily Inquirer, April 11, 2012).

Diplomatic protests were ignored by China and failed initial attempts at reciprocal fishing bans escalated with the stepped-up presence of Chinese fishing and patrol vessels in Scarborough Shoal. Chinese water cannons were focused on small Filipino fishing boats that slipped through the Chinese barriers, to fish for food more than for sale. And the Chinese continued to fish and poach coral in Scarborough Shoal.

On March 30, 2014, the Philippines submitted a case against China to the Permanent Court of Arbitration in The Hague over competing South China Sea claims, invoking the compulsory settlement of dispute clause under the Law of the Sea Convention.

China refused to participate in the arbitration, calling instead on bilateral negotiations to be used to resolve border disputes. Its refusal did not prevent the arbitral tribunal from proceeding with the case. On July 12, 2016, the Arbitral Tribunal in the South China Sea Arbitration (The Republic of the Philippines v. The People’s Republic of China) issued a unanimous award largely favorable to the Philippines.

The Tribunal ruled: “China has, through the operation of its official vessels at Scarborough Shoal from May 2012 onwards, unlawfully prevented Filipino fishermen from engaging in traditional fishing at Scarborough Shoal.” (PCA Award, Section VII(C)(5)(c)(814), p. 318.)

“The award of the arbitration is illegal, null and void. It is nothing more than a piece of wastepaper,” Foreign Ministry spokesperson Zhao Lijian said in a press conference in Beijing on July 12 (onenews.ph, July 13, 2021). He was basically repeating what President Rodrigo Duterte said about the Arbitral Award to the Philippines: “That paper, in reality between nations, that paper is nothing. Whoever is tough, the United States, the United Kingdom, they can do whatever they want. We won. When I came into office the ships were already in the West Philippine Sea, Chinese boats, we have nothing” (Philstar.com, May 6, 2021).

Earlier in 2019, President Duterte made confusing statements about allowing China to fish in our waters “because we (China and the Philippines) are friends.” Supreme Court Senior Associate Justice Antonio Carpio, one of the Philippines’ leading experts on the West Philippine Sea who helped craft and submit Philippines vs. China to the Arbitral Tribunal, pointed out that Duterte was wrong: “The Philippine government cannot allow Chinese fishermen to fish in Philippine exclusive economic zone (EEZ) in the West Philippine Sea because it will violate the Constitution.” Justice Carpio quoted the Constitution, “The State shall protect the nation’s marine wealth in its… exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens” (Rappler, June 25, 2019).

The Philippines has lost 3.6 million kilos of fish due to the presence of Chinese fishing vessels in the West Philippine Sea, according to estimates from food security advocacy group Tugon Kabuhayan (bworldoline.com, May 3, 2021). China has the largest fishing fleet in the world, with about 220,000 huge steel-hulled trawlers as opposed to Filipino fishermen’s wooden boats. In 2019, UP oceanographer Deo Onda estimated that the Philippines was losing around P33.1 billion annually from the damaged reef ecosystems in Panatag Shoal and the Spratlys Islands due to China’s reclamation activities (Philstar.com, Sept. 20, 2023).

Early this month, the Philippine military revealed a resurgence of Chinese swarming activity in the West Philippine Sea. The Coast Guard and Armed Forces reported “severe damage inflicted upon the marine environment and coral” at the Iroquois Reef, where it said 33 Chinese vessels had been moored in August and September. China, which has refused to recognize the 2016 ruling and has chafed at repeated mention of the case by Western powers, denied the latest claims of destruction of coral reefs (Reuters, Sept. 22, 2023).

Solicitor General Menardo Guevarra is studying the possibility of filing a second legal case before the Permanent Court of Arbitration (PCA) in the Hague. This is driven “not only by the alleged destruction of reefs but also by other incidents and the overall situation in the West Philippine Sea,” Guevarra told Reuters, adding that a report and recommendation would be sent to President Ferdinand Marcos, Jr. and the foreign ministry.

Justice Carpio recommends instead that the Philippines submit the conflicting claims in the Spratly Islands to voluntary arbitration in the International Court of Justice (ICJ), the principal judicial organ of the United Nations (UN) on international law. “All the other countries involved in the dispute — China, Vietnam, Malaysia, and Brunei — must agree to bring the issue to the ICJ. Brunei usually follows the lead of China,” Justice Carpio said. (Verafiles.org, Sept 23, 2023).

God willing, there would be peace at last in the West Philippine Sea.

 

Amelia H. C. Ylagan is a doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

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