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The real question from the midterms

FORMER PRESIDENT Rodrigo Duterte delivering his first State of the Nation Address on July 25, 2016. — PHILIPPINE STAR/KJ ROSALES

Former president Rodrigo Duterte will likely remain isolated in The Hague for the foreseeable future, possibly until the 2028 presidential elections. The mantle of leadership for the pro-Duterte opposition will, therefore, transfer to his daughter, Vice-President Sara Duterte. Senator Bong Go has a shot at being number one in the senate; but this does not automatically turn him into a presidential contender. The race for the presidency and vice-presidency of the land is littered with the political corpses of top-placing senatorial winners.

This gives the potential impeachment trial against Sara Duterte greater importance. If she is found guilty, she will not only be removed from her post but disqualified from running for the presidency. The narrative that emerges from the May 12 midterms could signal whether the administration has the momentum going into the possible impeachment trial against her. I use the word “possible” because the impeachment trial is still not certain. There may be a challenge before the Supreme Court on whether an impeachment filed in a previous congress can continue in the next congress. Also, the administration may be taking a calculated risk, because senators could be unwilling to convict the vice-president — and the answer to how they see the impeachment could depend on the outcome of the midterms.

Several surveys done in February — before Duterte’s arrest — show the administration slate winning at least nine, even possibly 10, of the 12 senate seats. Should this be the case then the administration will trumpet the outcome as validating its policies and politics, and may even use it to push its impeachment plans forward. However, should the administration win only seven seats or less, then it may give pause to senators, who could read it as a sign that the former president’s arrest may have created more sympathy for him and the Duterte family.

The senate midterms have degenerated into popularity contests, where ideological consistency and policy platforms are weak currency. At best, a candidate might sneak into the 10th to 12th positions by trying to hit the equivalent of an election bullseye — which is to ride on a popular narrative on a topic in the hope that there are enough marginal voters who care about that issue to catapult them from the ranks of the also-rans to the tail-end of senate winners. Meanwhile, congressional and local government races will be decided mainly by local issues, as well as the promise of delivering patronage, not so much on whether a local candidate can implement a national program at the local level.

Before the former president’s arrest this would, all things being equal, have worked against the nominal opposition, which for now is the slate identified with Vice-President Sara Duterte. Finding the hook on which to pull voters to the Duterte side is not as easy as it was in 2016, when the family stormed onto the national stage.

Now, however, it could try to build public animosity and anger with the administration on the arrest of President so that its second-tier candidates outside of incumbent senators Bong Go and Bato de la Rosa have a chance. And it will have to do this within two months.

But this is also not assured. The economy is doing moderately well, and inflation is broadly under control, so the gut economic issues are not problematic for the administration. International rice prices are at their lowest in years, and this should feed into the economy soon.

Also, trying to ride on the same issues that defined the Duterte brand under the former president, which is that of the political outsider who would upend the entrenched elite-dominated system in Manila while bringing lawlessness under control, and making the streets safe, is no longer a slam dunk. Duterte’s anti-drug campaign may have had some success, but at a very high cost in terms of lives, while generating significant public — even moral — anxiety over the way in which it was prosecuted. His embrace of China to balance out foreign policy was muddled by his administration’s inability to bring the worst of the POGO problems under control. And ultimately, the identification with those policies may be personal to former president Duterte, with only limited transferability to his endorsed candidates.

In analyzing why voting has degraded into a process that focuses on these political caricatures of pro- or anti-Duterte and binary formulations, instead of substantial issues and party platforms, the easy way out is to blame the voter, for being undiscerning, or the politicians, for substituting song-and-dance and comedic routines on stage, flooding the streets with their posters and billboards, or, at the local level, promising largesse to those who support them, instead of engaging in serious debate on the issues.

But both the voters and politicians are simply being efficient. Making an informed choice on who to vote for across a wide range of issues is time consuming and costly for a voter. After all, who has the time to go through the track record and programs of every single candidate for the senate, and then figure out which of their promises are proper or viable, or have the support of their allies and their parties? Holding politicians accountable once they are in office is even more difficult, because that requires coordinated action. A politician can make 10 promises easily during a campaign, knowing fully well that they will be barely held accountable three years from now on whether these promises were fulfilled or not.

The belief that the internet would make for better-informed voters is unjustified. It is a myth because we can absorb only so much information without being overwhelmed. Instead of fostering debate, the channels for political debate and engagement that have arisen through technology have instead increased the flow of disinformation, catered to biases, and walled us off into tribes.

On the other hand, politicians recognize that recall at the ballot box matters most because voters have little trust in the system, so building a consistent policy platform has low electoral returns. Instead of focusing on programs or party-building once they are in office, most politicians direct their time to fund-raising and alliance building (or preservation) and enhancing the patronage networks that they, or their relatives, will need for the next elections. Coalitions within congress are built on this assumption, i.e., the access to resources, not on differentiation based on programs or ideology.

The solution to this problem is a redesign of the political system, and public and private investment into education and, just as importantly, institutions that foster measured and informed discussions, not the demonization of voters. But the specifics will not be easy. Going straight to the voters with information campaigns is ineffective. We need to build a system that will encourage the development of what I call intermediary institutions that can effectively work between voters and candidates, and sift through information and distill these into digestible and understandable formats so that voters can focus on programs, not personalities. In the past these roles were performed by political parties, social organizations, interest groups, and the media. But these were co-opted by powerful interests through public or vested-interest corruption, and their credibility eventually diminished.

Redesigning our political system in an age where algorithms constantly adjust so that they can capture or even dominate our attention will be even more difficult than in the past. But the alternative is more of the same, where voter frustration morphs into disenchantment and polarization, which discredits institutions and leads to distorted electoral politics and more voter frustration and so on. In some societies, this leads to a social blow-up; in our case, it leads to emigration.

To move out of this spiral, we will have to pursue real democracy, but that will require a deeper overhaul of our system than what is currently achievable under our current politics.

 

Bob Herrera-Lim is a managing director at Teneo, a New-York based consulting firm that advises companies and investors globally. He covers all of Southeast Asia for the firm’s clients. He is also a fellow of the Foundation for Economic Freedom.

Treasury bills, bonds may fetch lower yields on BSP easing bets

BW FILE PHOTO

RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week may go down on expectations that the Bangko Sentral ng Pilipinas (BSP) could resume its easing cycle as early as next month following dovish comments from policy makers.

The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7 billion each in 91- and 182-day papers and P8 billion in 364-day papers.

On Tuesday, the government will offer P35 billion in T-bonds — P10 billion in reissued seven-year debt with a remaining life of three years and 27 days and P25 billion in reissued 25-year bonds with a remaining life of 24 years and 10 months.

T-bill and T-bond rates could be in line with secondary market yields, which broadly declined amid dovish signals from the BSP, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

A trader said in an e-mail that the reissued seven-year bond could fetch rates ranging from 5.75% to 5.85%, while the 25-year note could see yields within 6.4% to 6.55%.

At the secondary market on Friday, the 91-, 182-, and 364-day T-bills went down by 7.3 basis points (bps), 4.17 bps, and 10.43 bps week on week to end at 5.1769%, 5.5258% and 5.6877%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of March 21 published on the Philippine Dealing System’s website.

Meanwhile, the seven-year bond climbed by 2.04 bps week on week to 6.0985%, while the three-year debt, the tenor closest to the remaining life of the reissued papers to be offered this week, went down by 1.24 bps to 5.8313%. For its part, the 25-year paper inched down by 0.68 bp week on week to 6.3062%.

BSP Governor Eli M. Remolona, Jr. told Bloomberg News last week that the Monetary Board could cut rates at their April 10 policy meeting following the surprise pause at their February review, especially if March inflation turns out better than expected.

March inflation data will be released on April 4. Inflation sharply eased to 2.1% in February, bringing the two-month average to 2.5%. This is well within the central bank’s 2-4% target.

Mr. Remolona added that the BSP could deliver 50 bps in cuts this year, with 75 bps in reductions likely if economic growth weakens further.

There is a “high probability” that the BSP will deliver a rate cut at its April 10 meeting, Finance Secretary Ralph G. Recto, who is also a Monetary Board member, also told Bloomberg TV last week.

Mr. Recto added that the BSP could reduce benchmark borrowing costs by 50-75 bps this year, which could boost economic growth.

The BSP has brought down benchmark borrowing costs by a cumulative 75 bps since it began its easing cycle in August last year.

Last week, the BTr raised P30.8 billion from the T-bills it auctioned off, higher than the initial P22-billion plan, as total bids reached P118.944 billion, more than five times as much as the amount on offer.

Broken down, the Treasury borrowed P9.8 billion via the 91-day T-bills, higher than the P7-billion plan, as tenders for the tenor reached P35.384 billion. The three-month paper was quoted at an average rate of 5.118%, declining by 6 bps from the previous auction. Tenders accepted by the BTr carried yields of 5.1% to 5.123%.

The government also made a P9.8-billion award of the 182-day securities, above the programmed P7 billion, as bids stood at P31.05 billion. The average rate of the six-month T-bill was at 5.496%, 5.2 bps lower, with accepted rates ranging from 5.45% to 5.513%.

Lastly, the Treasury raised P11.2 billion via the 364-day debt papers, more than the P8 billion placed on the auction block, as demand for the tenor totaled P52.06 billion. The average rate of the one-year debt decreased by 7.6 bps to 5.697%, with bids accepted having yields of 5.693% to 5.713%.

Meanwhile, the two bond issues to be auctioned off this week were last offered on Jan. 28, where the government raised a total of P40 billion, higher than the P35-billion plan.

Broken down, the BTr raised P15 billion as planned from the reissued seven-year papers at an average rate of 5.894%.

It also borrowed P25 billion from the then-new 25-year papers, higher than the P20-billion program, as the government opened its tap facility to take advantage of the strong demand for the tenor. The issue fetched a 6.375% coupon and an average rate of 6.334%. — A.M.C. Sy

World Bank approves loan to modernize civil service

THE World Bank has approved a $67.34-million loan to fund the digitalization of the Philippine civil service, citing the need to increase transparency and better forecasting of salary expenses.

The Philippine Civil Service Modernization Project will support the establishment of a Human Resources Management Information System (HRMIS) and payroll system, it said in a statement on March 22.

The bank said the web-based and government-wide HRMIS will improve analytics for workforce planning, career development, succession planning, and training.

“Strong public institutions are fundamental to achieving inclusive growth and development,” World Bank Country Director for the Philippines, Malaysia, and Brunei Darussalam Zafer Mustafaoglu said.

“Global experience shows that countries with high-quality public administrations, including a merit-based civil service, raise more revenue, deliver better services, and create a more supportive environment for inclusive growth,” he added.

“This new system will allow budgeting based on the actual number of staff rather than plantilla positions, which will help manage cash better and save the government money,” the World Bank said.

In 2023, the Philippine civil service included 2.18 million plantilla positions and over 830,000 employees hired through job orders and service contracts.

The system is expected to enhance the accuracy of salary expense forecasts, transparency, and improved data for payroll management throughout the government.

The project will be piloted in 40 agencies such as the Civil Service Commission, the Department of Budget and Management (DBM), the Department of Information and Communications, the National Economic and Development Authority, and the Department of Finance.

Currently, there is no comprehensive HRMIS covering the whole public workforce.

The DBM maintains the establishment records of authorized positions for each department and agency called the Personnel Services Itemization and Plantilla of Personnel.

Meanwhile, departments and agencies also maintain their own personnel management systems. — Aubrey Rose A. Inosante

Filinvest to open Mimosa mall in Clark by Q4

FILINVEST MIMOSA + LEISURE CITY — MIMOSAPLUS.COM.PH

By Beatriz Marie D. Cruz, Reporter

GOTIANUN-LED Filinvest Land, Inc. (FLI) said it plans to open Filinvest Malls Mimosa in Clark by the fourth quarter (Q4) of the year. 

“We’re concentrating on opening at least this 21,000 square meters (sq.m.) in the fourth quarter [of 2025],” Filinvest Malls First Vice-President and Retail Business Unit Head Mitch A. Dumlao said at a news briefing during the company’s 70th-anniversary celebration on Friday last week.

The mall will be located within Filinvest Mimosa Plus Leisure City in Clark, Pampanga, about 100 kilometers north of Metro Manila.

“We’re carrying that Filinvest Malls brand where we go and then put the Mimosa into it as part of the whole estate,” Mr. Dumlao said.

The 201-hectare property is home to Quest Plus Conference Center Clark, Mimosa Plus Golf Course, Work Plus Office Campus, Bay 49, Baker J, and its premium steakhouse and bar, RARE Bar & Grill. The company is also developing a 400-room Crimson Clark Hotel within the estate.

As part of its 70th-anniversary celebration, the Filinvest Group launched Night Golf at Mimosa Plus Golf Course over the weekend to help position Clark as a commercial and tourism hub.

Night Golf at Mimosa Plus is expected to attract tourists from Clark International Airport, especially those seeking to play in the late afternoon after a morning flight.

Mimosa Plus Golf Course comprises two 18-hole, par-72 courses and a 48-bay driving range. It is the first GEO-certified golf facility in the Philippines, integrating sustainable design features, including a water conservation system, biodiversity preservation, and eco-friendly turf management.

“Mimosa Plus represents our vision for Clark — a place where business, leisure, and sustainable development converge to create lasting value for Filipinos,” Filinvest Development Corp. (FDC) President and Chief Executive Officer Rhoda A. Huang said during the event. 

Filinvest Hospitality Corp. First Senior Vice-President Francis C. Gotianun highlighted the strong demand from domestic and international locators due to Clark’s infrastructure and governance. 

“We’re seeing a lot of locators come in due to the good governance practices of Clark,” he said during the briefing. “You have key manufacturing companies here, excellent infrastructure, an international airport, well-developed roads, and reliable utilities — everything that makes for a strong investment destination.”

Beyond Clark, Mr. Gotianun said Filinvest will open its first Grafik Hotel in Baguio this year. It is also renovating its Crimson Hotel in Mactan, Cebu, with upgrades to its Spanish and Japanese restaurants.

Another mall in Filinvest’s pipeline, the 17,000-sq.m. Filinvest Mall Cubao in Quezon City, is set to open in the first half of 2026, Mr. Dumlao said.

“We’re hoping that all these developments — not just ours but those from other industry players — will help attract more visitors to the country,” FDC Chairman Jonathan T. Gotianun told BusinessWorld.

CTA voids BIR’s P116-M tax assessment vs Barrio Fiesta

CTA.JUDICIARY.GOV.PH

THE Court of Tax Appeals (CTA) has ruled in favor of Barrio Fiesta Manufacturing Corp., canceling the Bureau of Internal Revenue’s (BIR) tax deficiency assessment and the corresponding warrant of distraint and levy (WDL) worth nearly P116 million for 2013.

The CTA Second Division, in a decision promulgated on March 17, granted Barrio Fiesta’s petition for review filed on Nov. 13, 2019. 

The dispute involved alleged deficiencies in income tax, value-added tax (VAT), expanded withholding tax (EWT), and withholding tax on compensation (WTC) for the taxable year 2013, initially assessed at P155.92 million, including increments, as indicated in the WDL. The amount was later revised to P119.3 million in the Final Decision on Disputed Assessment (FDDA) dated June 19, 2019. 

The tribunal ruled in favor of the food manufacturer due to the invalidity of the letters of authority (LoAs) issued by the BIR.

The original LoA (No. LOA-024-2014-00000548), dated Nov. 14, 2014, authorized a revenue officer and a group supervisor to examine Barrio Fiesta’s 2013 books. However, after the revenue officer was reassigned, the audit was transferred to a new officer and supervisor through a memorandum of assignment (MoA) dated May 4, 2016.

The CTA held that this MoA did not constitute a valid LoA naming the new revenue officers, rendering the audit and assessments void.

“There must be a grant of authority before any revenue officer can conduct an examination or assessment. Equally important is that the revenue officer so authorized must not go beyond the authority given. In the absence of such authority, the assessment or examination is a nullity,” Associate Justice Ma. Belen M. Ringpis-Liban wrote in the 12-page ruling.

“The lack of the revenue officer’s authority to conduct an audit goes to the core of the assessment’s validity. Without such authority, the assessment is void and has no legal effect,” the court said, citing Supreme Court rulings in AFP General Insurance Corp. vs Commissioner of Internal Revenue and Commissioner of Internal Revenue vs McDonald’s Philippines Realty Corp.

The CTA reiterated that only the Commissioner of Internal Revenue or a duly authorized representative may issue a LoA for tax examinations. Any assessment conducted without a valid LoA is null and void. The court added that reassigning revenue officers without an amended LoA violated the taxpayer’s right to due process.

A second LoA (No. 024-2018-00000490), dated Sept. 17, 2018, issued for reinvestigation, was also deemed insufficient to cure the defect, as the original audit and initial assessment notices had already been issued. The tribunal ruled that this LoA authorized only a reinvestigation and could not validate the original flawed audit.

Barrio Fiesta had filed a petition for review with the CTA on Nov. 13, 2019, challenging the BIR’s WDL and deficiency tax assessments for 2013.

The BIR issued a preliminary assessment notice (PAN) dated June 6, 2017, which Barrio Fiesta received on June 14, 2017, assessing deficiency taxes of P147.61 million. The company responded on June 29, 2017.

On Aug. 17, 2017, Barrio Fiesta received two formal letters of demand (FLDs) with assessment notices, both dated July 31, 2017. The company then filed a request for reinvestigation of the VAT assessment on Sept. 18, 2017, which the BIR granted on Nov. 23, 2017.

The FDDA, issued on June 19, 2019, assessed a total deficiency of P119.30 million. On Oct. 15, 2019, Barrio Fiesta received WDL No. RRS-2-AMS-DA-10-01-19-2112(024) dated Oct. 1, 2019, prompting the company to file the CTA petition.

Barrio Fiesta argued that the tax assessment was void due to the absence of a valid LoA, contending that the reassignment of revenue officers via a MoA without a corresponding amended LoA was invalid and violated its right to due process. — Chloe Mari A. Hufana

Promo ongoing for Honda Connect app users

Honda Civic RS e:HEV E-CVT — PHOTO BY KAP MACEDA AGUILA

HONDA CARS PHILIPPINES, INC. (HCPI) is holding a “Gear Up for 2025” promo to “get vehicles ready for the year ahead.” All Honda Connect app users will be entitled to various offers and freebies until March 31 — including a free 50-point checkup with tire and battery assessment.

In addition, HCPI will give a P250 discount on the following service bundles: fuel filter plus engine cleaner, air-con filter plus A/C lubricant, engine air filter plus engine cleaner, brake pad plus brake and parts cleaner, and spark plug (four pieces).

HCPI is also treating its customers with up to 25% in discounts on select Honda merchandise, including Mugen and Honda collections. Lastly, customers who have not had their cars serviced at the dealership in over a year can get a free fuel card worth P500 or P500 off on services, with a minimum spend of P5,000 on any type of service.

In a release, HCPI said that “Honda Connect gives Honda car owners security, safety, and convenience in just a few taps. Users can control and manage their vehicle even from afar. With no subscription fees, features (include) Emergency Calls, Location Search, and 1:1 messaging, or news alerts straight from HCPI in the non-telematics platform.” The app can also give access to emergency contacts and Honda Cars dealerships should the user be in any accident. Meanwhile, the Location Search Feature guides the driver to various points of interest like gas stations and convenience stores. Users can also access after-sales services through the app, which also sends product advisories and maintenance reminders.

For more information, visit https://www.hondaphil.com/programs/gear-up-for-2025-promo. More offers are on display at https://www.hondaphil.com/promos. The latest HCPI models can be viewed in the virtual showroom: https://www.hondaphil.com/virtual-honda.

BIR calls 2025 targets achievable, sees CREATE MORE downside risks

PHILSTAR FILE PHOTO

THE Bureau of Internal Revenue (BIR) remains confident that it will meet its collection goal for major tax categories in 2025.

However, the new law lowering corporate income tax rates for certain foreign enterprises poses a negative risk to collections, it added.

This year’s collection goal is set at P3.232 trillion, up 13.36% compared to the P2.85 trillion in actual collections in 2024, according to Revenue Memorandum Order (RMO) No. 14-2025 released on March 20.

Some 52.95% or P1.71 trillion is expected to come from taxes on net income and profits. This was followed by value-added tax (VAT) of P710.04 billion, excise taxes (P343.10 billion), other taxes (P298.11 billion), and percentage taxes (P178.46 billion).

“Official stance is that targets are achievable, with reservations owing to the CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) law which gave away a lot of taxes to encourage investments,” BIR Assistant Commissioner Jethro M. Sabariaga told BusinessWorld via Viber over the weekend.

Mr. Sabariaga had been asked whether the BIR expects to meet or surpass the targets for major tax categories. 

President Ferdinand R. Marcos, Jr. in December signed the CREATE MORE Act to attract more investment.

“Lower income tax rates, accelerated/doubled deductions for certain costs, more value-added tax input allowed,” Mr. Sabriaga said in elaborating on the downward risks to the target.

The law further reduces the corporate income tax to 20% from 25% for registered business enterprises.

In the same RMO, the Bureau said it expects new tax measures to generate P21.98 billion including the VAT on digital service providers, windfall tax on mining, royalty on mining, the taxes on single-use plastics, passive income, financial intermediaries, and transactions. 

The VAT on digital services, which imposes a 12% value-added tax on digital services on both resident and non-resident providers, is the only tax measure apart from CREATE MORE to have been signed. — Aubrey Rose A. Inosante

Anko will open third store, taps Anne Curtis as endorser

ANNE CURTIS is the new endorser of Anko.

ANKO took over Alveo Land’s Mergent Residences model unit in Greenbelt 3 on March 4, showing a way to live large on a small budget.

Anko, the house brand of Kmart Australia, arrived in the Philippines in November last year, with a store in Glorietta 2. Anko is part of the Kmart Group under Wesfarmers Ltd. It has announced plans to open a second store in Alabang Town Center in May, but on March 17, it also announced the opening of a third store, its largest so far, in TriNoma in Quezon City.

Spanning 1,634 square meters, the TriNoma store will offer 1,421 square meters of retail space, with the remaining area allocated for office and stockroom use to support operations efficiently. A board-up in Anko’s signature magenta hue is now on display at Level 1 of TriNoma’s Activity Center.

“Opening in TriNoma is a natural next step for Anko in the Philippines. We want to be where Filipino families already shop for their homes, and Metro Manila’s top malls provide the perfect space to introduce more people to our brand,” said Arjun Puri, chief executive officer of Anko Global in a statement.

Rachel Turner, Country Manager of Anko Philippines, declined to comment on the then-undisclosed TriNoma location during the March 4 event, nor did she comment on the future of sourcing materials from the Philippines. However, she did say, “We’re looking for strategic locations where we can continue to expand,” she said in a small group interview.

“We’re really excited about Alabang Town Center, as we will be for other locations in the future. We look forward to being part of the community. When we come to a new location, or we open in a new site, we don’t just bring fantastic products… we also bring employment. We will create jobs, whether that’s retail, supply chain, logistics, customer service, and give back to the local community through job creation.”

Speaking about their five-year plan, she said, “We’re very excited about the stores that we have planned and announced, and we’re looking for new opportunities where we can find them.” According to her, Anko Global produced a billion units (items) last year, sold globally and domestically in Australia.

TAKEOVER
Meanwhile, Anko got some help from Australian interior designer Nicole Rosenberg, founder of Melbourne-based Liberty Interiors, to spruce up the Alveo Land unit. Using Anko items, she showed space-saving pieces like makeup towers, and used scented candles, linens, and decorative pieces from Anko’s line.

What she did could be used in any Filipino home, of any size: for example, she said that she used the brand’s sage and light blue pieces a great deal, because “I know not everyone enjoys using color. But I think using these tones, like green, for example, for me, isn’t really a color. It’s outside in nature. It’s like you’re bringing nature inside. I think it’s a good color to start with, if you’re feeling a bit hesitant about color.”

She gave tips like styling in odd numbers, like in groups of threes: “It gives height to the area that you’re styling, and it also brings the eye to that area,” she said in a group interview. As for space-saving tips, she suggested collapsible pieces like Anko’s foldable laundry basket, as well as installing a shelf above the toilet (a space that is usually unused).

ENDORSER
Finally, the brand released a commercial with Filipino-Australian actress Anne Curtis.

In a statement, she said, “Being a Filipino Aussie, it actually makes me so proud to be part of a brand that’s bringing some of my all-time favorite Australian products to the Philippines.

“Our homes are where we create memories, find comfort, and share love, even with our fur babies. And as a fur mom myself, I love to spoil this with Anko, I know that can be done with affordability and quality in mind. This journey with Anko is just getting started, and we can’t wait to share some exciting collection styling tips and special surprises with all of you. So stay tuned because there’s so much to look forward to with Anko.”

The commercial shows the actress going around a home filled with affordable items: Anko’s items run from P60 to the low thousands. Ms. Turner said, “Affordability for me means accessibility. Our purpose is to bring beautiful quality products to everybody. Affordability is one of the main pillars of that messaging.” — Joseph L. Garcia

Breaking down PhilHealth’s legal issues

The Philippine Health Insurance Corp., otherwise known as PhilHealth, was created to administer and implement the aspiration stated in the Philippine Constitution “to make essential goods, health, and other social services to all the people at an affordable cost.” It is supposed to provide needed personal health services to all Filipinos, whether they are contributing to PhilHealth or not. It covers all Filipinos, either because we are contributing to PhilHealth as mandated by law, or for those who are unable to and/or are exempted from contributing, the government is supposed to fund the same. This is implemented through laws that earmark tax and/or government revenues to fund PhilHealth.

Recently, PhilHealth has been the center of controversies which can be broken down into two issues, namely, 1.) can the PhilHealth transfer funds to the National Government, and, 2.) can the National Government withhold funds from PhilHealth.

This article serves as a primer on the legal issues surrounding the PhilHealth funds.

The most current law that governs PhilHealth is Republic Act No. 11223, otherwise known as the Universal Health Care Act, which was passed on Feb. 20, 2019. Section 11 of Republic Act No. 11223 provides as follow:

Program Reserve Funds. PhilHealth shall set aside a portion of its accumulated revenues not needed to meet the cost of the current year’s expenditures as reserve funds: Provided, That the total amount of reserves shall not exceed a ceiling equivalent to the amount actuarially estimated for two years’ projected Program expenditures: Provided, further, That whenever actual reserves exceed the required ceiling at the end of the fiscal year, the excess of the PhilHealth reserve fund shall be used to increase the Program’s benefits and to decrease the amount of members’ contributions.

Any unused portion of the reserve fund that is not needed to meet the current expenditure obligations or support the abovementioned programs shall be placed in investments to earn an average annual income at prevailing rates of interest and shall be referred to as the Investment Reserve Fund. The Investment Reserve Fund shall be invested in any or all of the following:

x x x

No portion of the reserve fund or income thereof shall accrue to the general fund of the National Government or to any of its agencies or instrumentalities, including government owned or -controlled corporations.

What can PhilHealth therefore do with its funds aside from meeting its current expenditure obligations or support its program? Section 11 specifically sets out that PhilHealth should place said funds in investments and enumerates what kind of investments it can enter into. Moreover, if the reserve funds exceed its two years projected expenditure, the excess should be used to increase benefits and to decrease members’ contributions.

Can PhilHealth transfer funds to the National Government? By express provision of Section 11 of the Universal Health Care Act, it is prohibited to give any portion of its funds or income to the National Government or to any government agencies, its instrumentalities including government-owned or -controlled corporations. Furthermore, the Universal Health Care Act itself provides only two ways to deal with excess funds, including any subsidy made by the National Government as this is part of its sourced for funds as provided under Section 37 — to increase benefits and to lower members contributions.

Where does PhilHealth get its funds? Section 37 of the Universal Health Care Act provides as follow:

Appropriations. The amount necessary to implement this Act shall be sourced from the following:

a.) Total incremental sin tax collections as provided for in Republic Act No. 10351, otherwise known as the “Sin Tax Reform Law”: Provided, That the mandated earmarks as provided for in Republic Act Nos. 7171 and 8240 shall be retained;

b.) Fifty percent of the National Government share from the income of the Philippine Amusement Gaming Corp. (PAGCOR) as provided for in Presidential Decree No. 1869, as amended: Provided, That the funds raised for this purpose shall be transferred to PhilHealth at the end of each quarter subject to the usual budgeting, accounting and auditing rules and regulations: Provided, further, That the funds shall be used by PhilHealth to improve its benefit packages;

c.) Forty percent of the Charity Fund, net of Documentary Stamp Tax Payments, and mandatory contributions of the Philippine Charity Sweepstakes Office (PCSO) as provided for in Republic Act No. 1169, as amended: Provided, That the funds raised for this purpose shall be transferred to PhilHealth at the end of each quarter subject to the usual budgeting, accounting, and auditing rules and regulations: Provided, further, That the funds shall be used by PhilHealth to improve its benefit packages;

d.) Premium contributions of members;

e.) Annual appropriations of the DoH [Department of Health] included in the GAA [General Appropriations Act]; and

f.) National Government subsidy to PhilHealth included in the GAA.

The amount necessary to implement the provisions of this Act shall be included in the GAA and shall be appropriated under the DoH and National Government subsidy to PhilHealth. In addition, the DoH, in coordination with PhilHealth, may request Congress to appropriate supplemental funding to meet targeted milestones of this Act.

Republic Act No. 10351 (Sin Tax Reform Law) has had several amendments, the most recent of which is Republic Act No. 11467, passed on July 22, 2020. The latter amended Section 288-A of the National Internal Revenue Code. The relevant sections pertaining to PhilHealth are as follows:

Section 288-A. Disposition of Revenue from Excise Tax on Sugar-Sweetened Beverages, Alcohol, Tobacco Products, Heated Tobacco Products, and Vapor Product

(A) Revenues from Excise Tax on Sugar-Sweetened Beverages from Republic Act No. 10963 — The provisions of existing laws to the contrary notwithstanding, 50% of the total revenues collected from the excise tax on sweetened beverages shall be allocated and used exclusively in the following manner:

1.) Eighty percent to the PhilHealth for the implementation of Republic Act No. 11223, otherwise known as the “Universal Health Care Act” of 2019; and.

2.) xxx.

(B) Revenues from Excise Tax on Alcohol Products. The provisions of existing laws to the contrary notwithstanding, 100% of the total revenues collected from the excise tax on alcohol products shall be allocated and used exclusively in the following manner:

1.) Sixty percent for the implementation of Republic Act No. 11223, otherwise known as the “Universal Health Care Act” of 2019;…

C.) Revenues from Excise Tax on Tobacco Products. The provisions of existing laws to the contrary notwithstanding, the total revenues collected from the excise tax on tobacco products shall be distributed in the following manner:

1.) xxx

2.) Fifty percent of the total excise tax collection from tobacco products shall be allocated and used exclusively in the following manner:

a.) Eighty percent to PhilHealth for the implementation of Republic Act No. 11223, otherwise known as the “Universal Health Care Act” of 2019; and

b.) …

D.) Revenues from Excise Tax on Heated Tobacco Products and Vapor Products. The provisions of existing laws to the contrary notwithstanding, the total revenues collected from the excise tax on heated tobacco products and vapor products shall be allocated and used exclusively in the following manner:

1.) Eighty percent to PhilHealth for the implementation of Republic Act No. 11223, otherwise known as the “Universal Health Care Act” of 2019; and

2.) xxx

xxx

“Provided, further, That the allocation for Universal Health Care shall be based on the collection of the second fiscal year preceding the current fiscal year.”

Reading the amendment made under Republic Act No. 11467 into the Sin Tax Law into Section 37(a), the earmark made under Sin Tax Law as amended is earmarked for PhilHealth and should, like the Internal Revenue Allotment for the Local Government Units, be automatically appropriated and given to PhilHealth. This is supported by the last paragraph of Section 37 which states that the amount appropriated by virtue of subsections (a.) to (c.) must be appropriated in the GAA or otherwise known as the General Appropriation Act.

As a matter of fact, the law itself provides how the amount should be computed, and it is merely ministerial for the government to compute the same and include it in the GAA. The earmarked amount is mandated by law, and not a mere subsidy as used in its ordinary sense.

As a matter of fact, the law itself allows PhilHealth and/or the Department of Health to ask for more money; the supplemental amount is rightfully a subsidy which the government may or may not appropriate to support PhilHealth.

 

Kim S. Jacinto-Henares is the former commissioner of the Bureau of Internal Revenue. She has extensive experience in commercial/corporate, securities and tax law, governance, international dispute resolution, and digital transformation. Currently she is a commissioner with the international think tank, Independent Commission for Reforming International Corporate Taxation.

IC eyes measures to improve HMO regulation

BW FILE PHOTO

THE INSURANCE COMMISSION (IC) is pushing for measures to better regulate the health maintenance organization (HMO) sector to strengthen healthcare in the country, including a law covering the industry and possibly transferring its oversight or jointly regulating it with another agency, its top official said.

Insurance Commissioner Reynaldo A. Regalado told reporters on Thursday that the IC is working on rules to strengthen the HMO industry.

The IC on March 13 issued a draft circular scrapping the planned increase in existing HMOs’ minimum capital requirement.

The latest draft now only requires new HMOs to have a paid-up capital of at least P100 million and classifies companies into tiers based on their net worth, requiring them to maintain a net worth not lower than their capital base.

The regulator in 2024 had sought comments on a possible hike in the sector’s minimum paid-up capital, which it had planned to implement over 10 years. Under the earlier proposal, from the current P10-million requirement, existing HMOs needed to have at least P50 million in paid-up capital by end-2024, which would be increased every three years to reach P500 million by end-2034.

Mr. Regalado said the new proposal was the result of “a more extensive discussion” with HMOs.

“There are HMOs that have been operating on a certain level whose responsibilities have been properly exercised the whole time. What we saw is they can still maintain the level and the quality of service that they can provide without actually having to go big [in terms of capital],” he said. “So, we thought, we don’t need to make them big. We just need to make them effective.”

The IC will focus on prudential regulation, including for HMOs’ expansion, Mr. Regalado added. “We’re putting focus on how we’re supposed to be handling HMOs.”

“We really need to have them properly regulated… That’s why we’re putting all these rules already. The next thing to consider… is to have a new HMO Code,” he said.

Mr. Regalado was referring to House Bill No. 8787 filed by Malasakit and Bayanihan Party-list Rep. Anthony T. Golez, Jr. or the HMOs Act of 2023, which seeks to provide a regulatory framework for the sector in recognition of these firms as “unique medical service providers combining financial management and the direct and indirect provision of health services.”

Under the proposal, HMOs will be regulated by a new agency attached to the Department of Health.

The IC chief said the agency remains open to handing over the supervision and regulation of the HMO sector or possibly jointly handling it with another government agency.

He said they are looking to discuss the matter with the Department of Health, especially state health insurer Philippine Health Insurance Corp. (PhilHealth).

“PhilHealth is like the HMO without competition. That’s how they operate to a certain extent,” Mr. Regalado said. “PhilHealth is improving their services, and that will have an effect on HMOs — positively in the first part, but later on, we will have to adjust. It could lead to better services and better offerings for HMOs.”

“We want to know where we can come in… I’m open to any arrangement that can help the bottom line, which is self-protection.”

The HMO industry booked a combined net income of P979.8 million last year, a turnaround from the P4.27 billion net loss recorded in 2023, latest IC data showed. — AMCS

Dongfeng offers buy-1-get-1 deal

PHOTO FROM DONGFENG MOTORS PHILIPPINES

DONGFENG MOTORS PHILIPPINES is offering a deal on the Aeolus Huge Hybrid until March 31. For P1.998 million, buyers of the electrified SUV will get the EX1 Pro BEV for free.

The Aeolus Huge Hybrid is powered by the brand’s Mach Power MHD system, featuring a 17-hp electric traction motor that works in sync with a turbocharged 1.5-liter gas engine delivering 175hp. The engine acts as a generator, charging the lithium battery while also powering the motor at low speeds. The SUV also comes with Level 2 driving assistance, including intelligent control, lane-keeping assist, and an advanced camera system that detects road signs, pedestrians, and vehicles — automatically adjusting the steering for added safety. It also gets a 360-degree camera with 3D assist, Apple CarPlay and Android Auto (via dongle), and a premium sound system by Danish audio expert.

Meanwhile, the EX1 Pro battery electric vehicle boasts a 27.2-kWh battery and a “practical” 300-km range on a full charge. DC fast charging can fill the battery from 30% to 80% in 30 minutes.

For more information, visit www.dongfeng-global.com or www.dongfengmotorsph.com; follow the official accounts of Dongfeng Philippines: Facebook (dongfengmotorsPH), YouTube (DongFengMotorsPh), and TikTok (dongfengmotorsph). Legado Motors, Inc. is the official Dongfeng Motors distributor in the Philippines.

Vietnam rice waste levels set as benchmark for PHL

PHILIPPINE STAR/MICHAEL VARCAS

By Kyle Aristophere T. Atienza, Reporter

POST-HARVEST RICE losses are expected to decline by at least nine percentage points following a P10-billion investment in upgrades to rice storage facilities, the Department of Agriculture said.

About 17% of the rice harvest is lost annually, against 8% for Vietnam, Agriculture Assistant Undersecretary Arnel V. de Mesa told BusinessWorld.

“Reaching Vietnam’s 8% benchmark — the difference would be 9 percentage points — would be a big achievement,” he said.

Fitch Solutions BMI said in a recent report that rice yields in the Philippines are lower than those in Vietnam but are very close to those in the largest exporter, India, and higher than those in Thailand.

BMI called it a “significant concern” that the Philippines is importing so much rice, and will account for 9.7% of global rice imports in 2024/25 based on US Department of Agriculture forecasts, given that 19.5% of the population had insufficient food consumption as of September 2024.

The National Food Authority (NFA) earlier this month said it is undertaking a P10-billion modernization program aimed at enhancing rice storage, building new rice mills, and upgrading drying facilities to improve the rice harvest recovery rate.

The program is funded through government allocations, with half of the budget granted late last year and the remaining P5 billion earmarked for rice mills, drying facilities, and other infrastructure projects included in the 2025 national budget.

The NFA said P1.5 billion will be allocated for repairing existing warehouses, while the remaining P3.5 billion will be used to add 800,000 metric tons of storage capacity by next year, doubling the NFA’s current capacity of 1 million metric tons.

NFA procurement is hindered by variations in rice quality and age of the inventory.

The main problem with the current warehouse network is congestion, due to the inability to manage stocks, according to retired agriculture professor Roy S. Kempis, currently director of the Center for Business Innovation at Angeles University Foundation.

The congestion is worsened by inability to correctly time the release of stocks to ensure supply stability and minimal price disruption.

“In the meantime, decisions to bring in imports and the timing of such shipments are very tentative. They also affect the amount of rice that needs to be stored in the warehouses,” he added.

Mr. Kempis noted that domestic production and supply varies by the season.

“In view of these problems, decision makers are faced the dilemma of what predictive formula to set up and follow,” he said.

“Once there is congestion, the ambient temperature required to store rice becomes difficult to maintain,” he added.

Mr. Kempis said as warehouse temperatures and humidity rise, the risk of contamination from fungi also rises.

Raul Q. Montemayor, national manager of the Federation of Free Farmers, said dry palay can last from six to eight months.

He noted that palay is usually milled into rice within four months to make room for the next harvest. Milled rice, meanwhile, can last up to three months.

Mr. Kempis said milled rice, which is packed in sacks and stored in air-ventilated warehouses, can be stored for maximum of two years, “provided there is no congestion inside the warehouses.”

Philippine Chamber of Agriculture and Food, Inc. President Danilo V. Fausto said the NFA’s modernization program will boost its ability to buy more palay from farmers at a better price.

“Palay will have a longer shelf life than rice since rice is at risk of spoilage after two months and/or weevil infestation,” he said.

Rice growers are currently facing low farmgate prices as traders opt to deal in imported rice.

The farmgate price has fallen to as low as P15-16 per kilo for freshly harvested grain, according to industry reports earlier this month.

On March 18, Malacañang urged farmers to work with local government units in bringing their palay harvests to NFA buying stations to bypass traders, who often seek to influence prices.

The NFA’s modernization projects are expected to be operational by the end of next year, in time for the dry season harvest of 2027.

The full upgrade program will include silos in major rice-producing areas such as the Cagayan Valley and Central Luzon, allowing the NFA to store rice for up to two years, far longer than the usual six months to one year for bagged rice.