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Leader of militant Islamist group BIFF killed in Maguindanao 

WESTMINCOM

A LEADER and known bomb-maker of the local terrorist group Bangsamoro Islamic Freedom Fighters (BIFF) was killed in an encounter with government forces in Maguindanao on Dec. 26, the military reported late Sunday.  

“The neutralization of one of the pillars of the BIFF is a positive development in the anti-terror campaign of the government in Central Mindanao. It also disrupted the bombing activities in the area,” said Lt. Gen. Alfredo V. Rosario, Jr., commander of the military’s Western Mindanao Command. 

The fatality was identified as Zukarno Guilil, known as the head of one unit of the BIFF and had several standing warrants of arrest for murder, destructive arson, and violation of the Anti-Terrorism Act of 2020. 

Guilil’s body was recovered along with two fragmentation grenades. 

The BIFF is a breakaway group from the Moro Islamic Liberation Front, which signed a peace deal with the government in 2014 that paved the way for the creation of the now Bangsamoro Autonomous Region in Muslim Mindanao.  

Maj. Gen. Juvymax R. Uy, head of the joint military-police task force in the encounter area, said community members and the local government in Shariff Saydona Mustapha town in Maguindanao provided government troops with leads on the presence of the BIFF faction.  

Mr. Uy said operations are continuing to track down the rest of the group, but at the same time called on the remaining members of the BIFF “to return to the folds of the law and live a peaceful life with their families.” 

Apart from the BIFF, other extremist groups that continue to be active in parts of southern Philippines include the Daulah Islamiyah Philippines, whose leader was killed in October, and the Abu Sayyaf known for kidnap-for-ransom operations. — MSJ

Gov’t executive branch workers to get P10K incentive 

NDRRMC.GOV.PH

PRESIDENT RODRIGO R. Duterte on Monday signed an administrative order granting incentives to government employees under the executive branch in recognition of their “hardwork, commitment and dedication” to public service amid the coronavirus pandemic and the aftermath of typhoon Odette. 

Under Administrative Order 45, each personnel will get P10,000, including workers in national government agencies, military personnel, and uniformed police force, among others. 

Eligible civilian personnel are those occupying a regular, contractual, or casual position as of end-November, rendering at least four months of satisfactory service. Those who have provided services for less than four months will receive a prorated share. 

“The government continues to acknowledge all public servants for their collective and unceasing participation in and invaluable contribution to the establishment of streamlined government processes and responsive delivery of services to the public,” reads the order, “especially in the midst of the prevailing public health emergency due to the COVID-19 (coronavirus disease 2019) pandemic.” 

The incentive may also be granted in local government units and local water districts. 

The budget department will issue supplemental guidelines for implementation. — Alyssa Nicole O. Tan

Comelec to hold mock elections in 6 areas on Dec. 29 

A MOCK election in preparation for the May 2022 local and national polls will be held in six areas across the country on Dec. 29, the election commission announced Monday.  

Commission on Elections (Comelec) Spokesperson James B. Jimenez said in a press briefing that the sites will be in Pasay City in Metro Manila, Albay, Negros Oriental, Leyte, Isabela, and Lanao del Sur.  

Each of the clustered precincts will be able to accommodate an average of 500 to 600 people and will be open from 5 a.m. to 7 p.m., he said.  

Voters who will participate in the mock elections will be required to present a vaccination card or an RT-PCR test result showing they are COVID negative. 

The 30-inch test ballot that will be used in the simulations would contain false names and not the tentative list of candidates for the 2022 elections, Mr. Jimenez said.  

Presidential and local candidates will be placed on the front of the ballot while the party lists will be placed on the back. 

Meanwhile, the Comelec spokesperson also clarified that the tentative list of candidates released last week included those with pending motions for considerations. 

“We expect that those cases will be resolved around the first week of January,” Mr. Jimenez said in Filipino. 

The Comelec estimates that cases relating to the cancellation of candidacy and nuisance candidates will be decided upon by Jan. 7, in time for the printing of the ballots starting start on Jan. 15. — Jaspearl Emerald G. Tan

The legal implications of the imposition of fiduciary duty of diligence of the highest degree

(Part 1)

The enforcement of the doctrine that the degree of diligence required of corporations vested with public interest is of the highest degree (i.e., extraordinary diligence) has legal implications on: (i) the burden of proof to make the corporation directly liable to the injured stakeholder; and (ii) the personally liability of the directors, trustees, or officers acting for and in behalf of the corporation.

Under the old Corporation Code, where there was as yet no recognition of the special category of corporations vested with public interest, the burden to show that the corporation, acting through its Board of Directors or duly authorized officers, acted negligently in breach of the contract (culpa contractual) or to cause damage to others not bound by any contractual relations (culpa aquiliana) was on the part of the plaintiff seeking relief from the corporation. In other words, it was a proper defense for the corporation to avoid liability from its acts, contracts and transactions to show that it has exercised the diligence of a prudent person or a good father of a family.

On the other hand, the director, trustee, or officer acting in behalf of the corporation could be held personally liable for such corporate act, contract, or transaction only when it was shown that he had breached his duties of diligence and loyalty encapsulated in the first paragraph of then Section 31, thus: “Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.” Note that while the corporation could be held liable to a third party for simple negligence committed by an acting director, trustee, or officer in its behalf, the latter could only be made liable personally when he acted with fraud or gross negligence.

The rule embodied under Section 31 of the old Corporation Code carried the second branch of the Business Judgment Rule to the effect that directors, trustees, or officers who act in the name of the corporation in the lawful pursuit of its business affairs do not become liable for the losses sustained by the corporation, or damages incurred, unless it is shown that they have breached their fiduciary duties of diligence or loyalty. Properly understood, Section 31 provided for the exception to the general rule in the Law on Agency that directors, trustees, or officers (i.e., agents) acting in behalf, and in pursuit of the business affairs, of the corporation (i.e., principal) are not personally liable for the damages sustained by parties dealing with the corporation, or those adversely affected by the pursuit of the corporate business enterprise.

Starting with its decision in Tramat Mercantile, Inc. v. Court of Appeals, the Supreme Court has interpreted the legal effect of Section 31 to mean that as a general rule directors, trustees, or officers do not become personally liable for acts, contracts, and transactions entered into in behalf of and in pursuit of the corporate business enterprise, thus:

Personal liability of a corporate director, trustee or officer along (although not necessarily) with the corporation may so validly attach, as a rule, only when: (a) He assents: (i) to a patently unlawful act of the corporation; (ii) for bad faith or gross negligence in directing its affairs; (iii) for conflict of interest, resulting in damages to the corporation, its shareholders or other persons (Sec. 31, Corporation Code); (b) He consents to the issuance of watered stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto (now Section 65, Corporation Code); (c) He agrees to hold himself personally and solidarily liable with the corporation (De Asis & Co., Inc. v. Court of Appeals, 136 SCRA 599 [1985]); (d) He is made, by a specific provision of law, to personally answer for his corporate action (Exemplified in what is now Section 170, Corporation Code; also Section 13, P.D. No. 115, or the Trust Receipts Law).

By the use of the phrase “may so validly attach, as a rule, only when,” it is clear that the Court emphasizes that the general rule is that directors, trustees, and other corporate officers are not personally liable for corporate debts, and that the only time they do become personally liable is on the specifically enumerated four areas indicated in the formula. The enumerative manner by which Tramat Mercantile, Inc. has effectively limited the cases when a director, trustee or officer may be held liable has been reiterated verbatim in a long line of subsequent decisions of the Supreme Court.

In the waning years of the old Corporation Code, the Supreme Court, in its decision in Virata v. Ng Wee, formally discussed the “fiduciary duty of directors to all stakeholders,” and firmed-up the legal basis in support of the doctrine that directors, trustees, and officers owe fiduciary duty of diligence to particular creditors of corporations, namely, investors in the corporation’s debt instrument.

Among the critical issues resolved in Virata v. Ng Wee was whether the Vice-President for Operations, not a member of the Board, and who signed in an official capacity the agreement extending a credit line to Power Merge under terms that defrauded some of the investors (Ng Wee) in debts instruments of Wincorp (an investment house) could be held personally liable for the loss sustained by the investors under what is now Section 30 of the Revised Corporation Code: “Petitioner Reyes relies on the black letter law in his bid for absolution. He claims that he is not a director of Wincorp, but its Vice-President for Operations. Thus, he can only be held liable under the second paragraph of the provision. As can be read, officers are only precluded from acquiring or attempting to acquire any interest in conflict with that of the company he is serving. There being no allegation of him being guilty of conflict of interest, Reyes argues that he cannot be held liable under the provision.”

In holding that the argument was bereft of merit, the Court held — ascribing liability to a corporate director, trustee, or officer by invoking [what is now Section 30 of the Revised Corporation Code] is distinct from the remedial concept of piercing the corporate veil. While [Section 30] expressly lays down specific instances wherein the mentioned personalities can be held liable in their personal capacities, the doctrine of piercing the corporate veil, on the other hand, is an equitable remedy resorted to only when the corporate fiction is used, among others, to defeat public convenience, justify wrong, protect fraud or defend a crime.

Applying the doctrine, petitioner cannot escape liability by claiming that he was merely performing his function as Vice-President for Operations and was duly authorized to sign the Side Agreements in Wincorp’s behalf. The Credit Line Agreement is patently contradictory if not irreconcilable with the Side Agreements, which he executed on the same day as the representative for Wincorp. The execution of the Side Agreements was the precursor to the fraud. Taken with Wincorp’s subsequent offer to its clients of the “sans recourse” transactions allegedly secured by the Promissory Notes, it is a clear indicium of fraud for which Reyes must be held accountable.

A careful reading of the foregoing portion of Virata v. Ng Wee clearly implies the doctrine that outside of fiduciary duties of diligence and loyalty contained in Section 30 of the Revised Corporation Code, directors, trustees, and officers can be held solidarily liable with the corporation for the damage suffered by creditors and other stakeholders in their dealings with the corporation by the application of the fraud piercing doctrine. In other words, the commission of fraud itself in the pursuit of corporate contracts and transactions by itself constitutes an actionable basis under tort laws to make acting directors, trustees or officers solidarily liable to creditors and other stakeholders suffering injury by reason thereof.

The other critical issue resolved in Virata v. Ng Wee was whether directors (Cua and the Cualopings) who approved the credit lines extended to Power Merge on the basis of the favorable recommendation of “the screening committee [who] found the application to be above board,” and without knowledge of the execution of the fraudulent Side Agreements, could be held personally liable under what is now Section 30 of the Revised Corporation Code, there being no showing that they acted with fraud. In defining the personal liability of said directors, the Court laid down the general principles of the Board of Directors being “primarily charged with protecting the assets of the corporation in behalf of its stakeholders,” thus:

“Petitioners Cua and the Cualopings bewail that the above-quoted statement is overarching, sweeping, and bereft of legal or factual basis. But as per the records, the totality of circumstances in this case proves that they are either complicit to the fraud, or at the very least guilty of gross negligence, as regards the “sans recourse” transactions from the Power Merge account.

“The board of directors is expected to be more than mere rubber stamps of the corporation and its subordinate departments. It wields all corporate powers bestowed by the Corporation Code, including the control over its properties and the conduct of its business. Being stewards of the company, the board is primarily charged with protecting the assets of the corporation in behalf of its stakeholders.”

The Court then ruled on the personal liability of the directors to a creditor of the corporation, based on “fiduciary duty of diligence,” thus:

“Petitioners Cua and the Cualopings bewail that the above-quoted statement is overarching, sweeping, and bereft of legal or factual basis. But as per the records, the totality of circumstances in this case proves that they are either complicit to the fraud, or at the very least guilty of gross negligence, …

“Cua and the Cualopings failed to observe this fiduciary duty when they assented to extending a credit line facility to Power Merge. … the SEC discovered that Power Merge is actually Wincorp’s largest borrower at about 30% of the total borrowings. It was then incumbent upon the board of directors to have been more circumspect in approving its credit line facility, and should have made an independent evaluation of Power Merge’s application before agreeing to expose it to a P2,500,000,00.00 risk.

“Had it fulfilled its fiduciary duty, the obvious warning signs would have cautioned it from approving the loan in haste. To recapitulate: This only goes to show that even if Cua and the Cualopings are not guilty of fraud, they would nevertheless still be liable for gross negligence in managing the affairs of the company, to the prejudice of its clients and stakeholders.

“Under such circumstances, it becomes immaterial whether or not they approved of the Side Agreements or authorized Reyes to sign the same since this could have all been avoided if they were vigilant enough to disapprove the Power Merge credit application. Neither can the business judgment rule apply herein for it is elementary in corporation law that the doctrine admits exceptions: bad faith being one of them, gross negligence, another. The CA then correctly held petitioners Cua and the Cualopings liable to respondent Ng Wee in their personal capacity.”

The third critical issue resolved in Virata v. Ng Wee was whether a director (Estrella) who was merely a nominee in the Board on behalf of the Chairman, and who received no compensation or per diems in attending board meetings, could be held personally liable under what is now Section 30 of the Revised Corporation Code. In denying the defense, the Court referred to “a betrayal of the trust reposed by the corporate investors, clients, and stakeholders” upon the board and its individual members, thus:

“The practice of installing undiscerning directors cannot be tolerated, let alone allowed to perpetuate. This must be curbed by holding accountable those who fraudulently and negligently perform their duties as corporate directors, regardless of the accident by which they acquired their respective positions.

“In this case, the fact remains that petitioner Estrella accepted the directorship in the Wincorp board, along with the obligations attached to the position, without question or qualification. The fiduciary duty of a company director cannot conveniently be separated from the position he occupies on the trifling argument that no monetary benefit was being derived therefrom. The gratuitous performance of his duties and functions is not sufficient justification to do a poor job at steering the company away from foreseeable pitfalls and perils. The careless management of corporate affairs, in itself, amounts to a betrayal of the trust reposed by the corporate investors, clients, and stakeholders, regardless of whether or not the board or its individual members are being paid. The RTC and the CA, therefore, correctly disregarded the defense of Estrella that he is a mere nominee.” n

(To be continued.)

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.

 

Atty. Cesar L. Villanueva is chair of MAP Corporate Governance Committee, trustee of the Institute of Corporate Directors (ICD), the first chair of the Governance Commission for GOCCs (GCG – August 2011 to June 2016), dean of the Ateneo Law School (April 2004 to September 2011), and founding partner of Villanueva Gabionza & Dy Law Offices.

map@map.org.ph

cvillanueva@vgslaw.com

http://map.org.ph

Archbishop Desmond Tutu: Father of South Africa’s ‘rainbow nation’

WORLD ECONOMIC FORUM

Archbishop Emeritus Desmond Mpilo Tutu has died at the age of 90.

Archbishop Tutu earned the respect and love of millions of South Africans and the world. He carved out a permanent place in their hearts and minds, becoming known affectionately as “The Arch.”

When South Africans woke up on the morning of April 7, 2017 to protest against then President Jacob Zuma’s removal of the respected Finance Minister Pravin Gordhan, Archbishop Tutu left his Hermanus retirement home to join the protests. He was 86 years old at the time, and his health was frail. But protest was in his blood. In his view, no government was legitimate unless it represented all its people well.

There was still that sharpness in his words when he said that: “We will pray for the downfall of a government that misrepresents us.”

These words echoed his stance of ethical and moral integrity as well as human dignity. It is on these principles that he had fought valiantly against the system of apartheid and became, as the Desmond Tutu Foundation rightly affirms, “an outspoken defender of human rights and campaigner for the oppressed.”

But Archbishop Tutu didn’t stop his fight for human rights once apartheid came to a formal end in 1994. He continued to speak critically against politicians who abused their power. He also added his weight to various causes, including HIV/AIDS, poverty, racism, homophobia, and transphobia.

His fight for human rights wasn’t limited to South Africa. Through his peace foundation, which he formed in 2015, he extended his vision for a peaceful world “in which everyone values human dignity and our interconnectedness.”

He also became relentless in his support for the Dalai Lama, whom he considered his best friend. He condemned the South African government for refusing the exiled Tibetan spiritual leader a visa to deliver the “Desmond Tutu International Peace Lecture” in 2011.

EARLY YEARS
Archbishop Tutu came from humble beginnings. Born on Oct. 7, 1931 in Klerksdorp, in the North West Province of South Africa where his father, Zachariah was a headmaster of a high school. His mother, Aletha Matlare, was a domestic worker.

One of the most influential figures in his early years was Father Trevor Huddleston, a fierce campaigner against apartheid. Their friendship led to the young Tutu being introduced into the Anglican Church.

After completing his education, he had a brief stint teaching English and History at Madibane High School in Soweto; and then at Krugersdorp High School, west of Johannesburg; where his father was a headmaster. It was here that he met his future wife, Nomalizo Leah Shenxane.

It is interesting that he agreed to a Roman Catholic wedding ceremony, although he was Anglican. This ecumenical act at the very early stage in his life gives us a hint of his commitment to ecumenical work in later years.

He quit teaching in the wake of the introduction of the inferior “Bantu education” for black people in 1953. Under the Bantu Education Act, 1953, the education of the native African population was limited to producing an unskilled work force.

In 1955 Tutu entered the service of the church as a sub-deacon. He got married the same year. He enrolled for theological education in 1958 and, after completing his studies, was ordained as a deacon of Saint Mary’s Cathedral in Johannesburg in 1960, and became its first black dean in 1975.

In 1962 he went to London to pursue further theological education with funding from the World Council of Churches. He earned a Master of Theology degree, and after serving in various parishes in London, returned to South Africa in 1966 to teach at the Federal Theological Seminary at Alice, Eastern Cape.

One of the lesser-known facts is that he had special interest in the study of Islam. He had wanted to pursue this in his doctoral studies, but this was not to be.

The activities he was involved in the early 1970s were to lay the foundation for his political struggle against apartheid. These included teaching in Botswana, Lesotho, and Swaziland and, thereafter, a posting to London as the Associate Director for Africa at the Theological Education Fund, and his exposure to Black Theology. He also visited many African countries in the early 1970s.

He eventually returned to Johannesburg as the dean of Johannesburg and the rector of St. Mary’s Anglican Parish in 1976.

POLITICAL ACTIVISM
It was at St. Mary’s that Tutu first confronted the then apartheid Prime Minister John Vorster, writing him a letter in 1976 decrying the deplorable state in which black people had to live.

On June 16 Soweto went up in flames, when black high school pupils protested against the forced use of Afrikaans as a medium of instruction, and were mowed down by apartheid police.

Bishop Tutu was thrust deeper and deeper into the struggle. He delivered one of his most passionate and fiery orations following the death in detention of the black consciousness leader, Steve Biko in 1977.

His role as the General Secretary of the South African Council of Churches, and later as the rector of St. Augustine’s Church in Orlando West in Soweto, saw him become an ardent critic of the most egregious aspects of apartheid. This included the forced removals of black people from urban areas deemed to be white areas.

A TARGET
With his growing political activism in the 1980s, the Arch became a target of the apartheid government’s full-scale victimization and faced death threats as well as bomb scares. In March 1980 his passport was revoked. After much international outcry and intervention, he was given a “limited travel document” two years later to travel overseas.

His work was recognized globally, and he was awarded Nobel Prize for Peace in 1984 for being a unifying leader in the campaign to resolve the problem of apartheid in South Africa.

He went on to receive more distinguished awards. He became the Bishop of Johannesburg in 1984, and the Archbishop of Cape Town in 1986. In the following four years leading up to the release of Nelson Mandela after 27 years in prison, the Arch had his work cut out for him. This involved campaigning for international pressure to be brought on the apartheid through sanctions.

DEMOCRACY YEARS
After 1994, he headed the Truth and Reconciliation Commission. Its primary goal was to afford those who committed human rights abuses — for or against apartheid — the opportunity to come clean, offer legal amnesty to deserving ones, and to enable the perpetrators to make amends to their victims.

Two greatest moments in his personal life took his theological outlook beyond the confines of the Church. One was when his daughter Mpho declared she was gay and the church refused her same sex marriage. The Arch proclaimed: “If God, as they say, is homophobic, I wouldn’t worship that God.”

The second was when he declared his preference for assisted death.

South Africa is blessed to have had such a brave and courageous man as The Arch, who truly symbolized the idea of the country as a “rainbow nation.” South Africa will feel the loss of the moral direction of this brave soldier of God for generations to come. Hamba kahle (go well) Arch.

 

P. Pratap Kumar is emeritus professor, School of Religion, Philosophy and Classics, at the University of KwaZulu-Natal. He receives funding from the National Research Foundation of South Africa.

Europe’s blackout economics and the Philippines’ path to brownouts

Rolling blackout due to the tight power supply started already in Europe on Dec. 23, in Kosovo then Serbia. There were also power supply warnings in the United Kingdom, while France’s nuclear power output has declined significantly and they must get power from somewhere else.

The continent experienced calm weather over the past several months so wind output was low and power supply was tight, bordering on blackouts as early as September this year. So, they shifted to natural gas and prices jumped through the roof — from only €19.12 on Dec. 31, 2020 to €180.27 on Dec. 21 this year, 9.4 times higher than the 2020 mark or an 843% hike.

BLACKOUT ECONOMICS
Blackout economics is the policy of shrinking the supply of stable, reliable, dispatchable power while raising the supply of unstable, unreliable, intermittent power like wind and solar, leading to stretched and thin reserves while demand rises. It is a deliberate move to invite blackouts while consistently raising power prices.

The biggest practitioner of blackout economics would be the biggest economy of Europe, Germany. Despite this tight power supply and very high gas prices, Germany, which had 17 nuclear power plants until 2011, will close three of its six remaining nuclear power plants at the end of this month — that’s next week — then close the last three by December 2022. In addition, they will also close all coal power plants by 2030.

Germany’s new government, led by the political socialist Social Democratic Party (SPD) and the environmental socialist Greens party, hastened this irrational energy transition. The pro-business, pro-market Free Democratic Party (FDP) that joined the coalition has been compromised by the socialistic energy agenda of its two partners.

This should not be the case because the world has a huge supply of conventional power like natural gas and coal both for the present and future.

HIGH RESERVES/PRODUCTION (R/P) RATIO
Many countries have abundant reserves on the ground such that if they continue their current yearly production for domestic and the export markets, their reserves/production (R/P) ratio will last for hundreds of years. The proven natural gas reserves in Russia are 37,392 billion cubic meters (BCM) and 12,619 BCM in the US. The R/P ratio for natural gas is 334 years in Venezuela, 231 years in Turkmenistan, 144 years in Qatar, and 128 years in Iran.

For coal, the R/P ratio is much longer: 1,429 years in the Ukraine, 514 years in the US, 407 years in Russia, 334 years in Germany, and 315 years in Australia. Our ASEAN neighbors’ R/P ratio: Indonesia has 62 years and Vietnam has 69 years. No data for the Philippines is given (see Table 1).

So, for the Philippines, an abundant supply of coal can be sourced from Indonesia, Vietnam, Australia, and the US, and liquefied natural gas (LNG) to augment or replace the natural gas from Malampaya can be sourced from the Middle East and the US.

BROWNOUT PATHWAY FOR THE PHILIPPINES
A power blackout is the complete outage or shutdown of electricity due to strong storms, and very low supply on days and hours with high demand. A brownout is a partial outage of electricity, when the system capacity and voltages are reduced by at least 10-25%.

Consider these four reports in BusinessWorld this month:

“RE projects with 16,000 MW capacity make DoE initial cut” (Dec. 9),

“PHL signs on to OECD clean-energy financing program” (Dec. 13),

“PSALM ordered not to take on more liabilities from Mindanao power co-ops owing billions” (Dec. 17),

“Meralco proceeds with bids for 170-MW emergency supply” (Dec. 24).

The first two reports are related. More unstable and intermittent renewable energy (RE) like 10,935 MW of wind and 4,251 MW of solar will be added in the coming years, with only one coal plant (300 MW in San Carlos City, Negros Occidental) and one huge LNG plant (6,492-MW in Navotas by San Miguel Electric Corp.) having obtained clearance from the Department of Energy (DoE). The Philippines signed up with the Organization for Economic Cooperation and Development (OECD) Clean Energy Finance and Investment Mobilization (CEFIM) Program that will push more intermittent RE in the country’s grid.

The third report is about a tight financial situation that the Power Sector Assets and Liabilities Management Corp. (PSALM) is in. As of Oct. 31 this year, two delinquent electric cooperatives owed PSALM P15.41 billion: P12.40 billion from Lanao del Sur Electric Cooperative, Inc. (LASURECO) and P2.91 billion from Maguindanao Electric Cooperative, Inc. (MAGELCO).

This could be the main reason why PSALM was given P16 billion by Congress for 2021 and 2022 (see this column on Sept. 13, https://www.bworldonline.com/adbs-kill-coal-plan-government-corporations-and-power-transmission/). Taxpayers nationwide will pay for the loans of these two electric cooperatives which may have no intention of paying, and plunge their customers into darkness if their abuses are not tolerated further.

The last report is about Meralco’s plan to get peaking plant power supply covering Feb. 26 to July 25, 2022 to protect itself and its customers from potential blackouts and price surges in the Wholesale Electricity Spot Market (WESM) over those five months. Good move.

PRICE SPIKES IN 2021
At a media briefing by the Independent Electricity Market Operator of the Philippines (IEMOP) on Dec. 21, they reported that the load weighted average price (LWAP) for the December billing has increased to P6.32/kWh due to thin supply caused by forced and planned outages of major plants.

The increase in prices in 2019 were understandable due to high demand before the pandemic while some big plants were in forced outages. The drastic decline in 2020 was due to the strict and prolonged pandemic lockdown and business closures. Prices jumped again to P5-8/kwh from May to October 2021 except in September, leading to prices this year approaching those in 2019 (see Table 2).

A number of big conventional plants like coal, natural gas, big hydro and geothermal are old and ageing, which occasionally leads to unscheduled or extended closure for repairs and maintenance. We need new big plants of similar technology, plus small modular reactors (SMRs) — nukes — to provide baseload and mid-merit power and avoid blackouts, or even brownouts.

Energy development should be guided by market demand and supply, not politics and the environmental lobby. A heavily politicized power policy leads to more politics than a stable power supply. We should avoid the European pathway and follow that which many of our big Asian neighbors have taken.

Happy new year, dear readers.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

Think old folks are too scared of inflation? Listen to this.

For Americans under 50, inflation is little more than a theoretical concept. But for those of us born in the late 1950s and 1960s, the inflation of the 1970s was a formative experience we’d rather not repeat. Inflation was as much a part of our childhood as COVID is for today’s kids.

It was always there in the background. Occasionally it receded, only to return worse than before. Inflation was a sometimes disquieting, sometimes terrifying fact of life.

Everyone from that time remembers gasoline prices shooting up, accompanied by shortages, rationing, and long lines at the pump. But inflation is never about a single product or sector. It is an economy-wide phenomenon. Gas prices went up and up and up but, equally important, other prices didn’t go down and down and down.

In the late 1970s, Tom Noonan, then around 20 years old, worked in a Winn-Dixie supermarket in Louisville, Kentucky. His job was to change price tags a couple of times a week. He’d go through the store with a box cutter and a pricing gun, slicing off the old price stickers and applying the new, higher ones. It’s one of the 1970s memories that came pouring out of my Facebook friends when I asked about their experiences.

Not every store was so meticulous. Many just slapped the new prices on top of the old ones. “I half remember peeling off price labels to get a lower price (maybe on a book?), not even realizing that what I was doing was wrong or illegitimate,” confesses Mike Schiffer, a law school IT manager born in 1968, in the Facebook thread. “I don’t think I really understood how prices were set or changed at that point.”

I remember grocery shopping with my mother in the early 1970s, as the price of ground beef kept rising: from 89 cents a pound to 99 cents to $1.09 and even $1.19. In April 1973, we joined a weeklong meat boycott. (Like many participants, my mother cheated, relying for a few meals on meat purchased the previous week.)

The boycott was a half-baked combination of economic theory, activist theater, and housewife cri de coeur. “Devalue Pot Roast Not Dollars!” read a protest poster shown on the New York Times front page. In response, President Richard Nixon imposed tighter price controls on meat. Betty Crocker’s meat-stretching Hamburger Helper, which went national in 1971, was a longer-lived remedy.

While I was a middle-schooler tracking meat prices and sewing my own clothes, Bill Meagher was a 10-year-old Philadelphia consumer with a gripe about a local delicacy. The price of his favorite TastyKake snack kept going up. He wrote a letter complaining to the president of the company. Much to his astonishment, Meagher recalled, he got a reply “explaining inflation to me in very simple terms.”

Across the country in Turlock, California, five-year-old Mary Hodder discovered that her weekly allowance of five cents would no longer buy a candy bar. They were now 10 cents. “My 5y old brain was like WHOT how could this happen?” she wrote me in a text message. “And my dad explained inflation. And my 5 year old brain thought: why doesn’t everyone just stop it?” Hers was essentially President Gerald Ford’s Whip Inflation Now strategy, minus the infamous buttons.

What made inflation especially disconcerting was that none of the adults in charge knew what to do about it. Our parents were powerless, and we could feel their stress. Even cost-of-living raises didn’t solve the problem, because prices went up as labor costs did. Everybody, from employers and workers to lenders and borrowers, learned to build an inflation estimate into their plans. And those expectations made inflation more and more intractable — raise your prices, strike for higher wages, lest you fall behind.

Making matters worse was “bracket creep.” With a steeply progressive income tax, a cost-of-living raise meant a higher tax bracket, which meant falling further behind inflation. In response, unions bargained for more generous health-insurance and pension benefits that wouldn’t face the tax hit — arrangements that were emulated for many non-union jobs and that redound in legacy costs to this day.

Even worse, average Americans weren’t alone in their helplessness. The president of TastyKake was just as impotent as our parents were. So was the president of the United States.

“It’s really scary,” a senior Carter administration official told Time in 1980, when inflation hit 13.5% after four years of increases. “This inflation thing is frightening because we do not know what causes it, or what to do about it. The economists go to their computers, plug in the data, and out comes information that says that nothing like this should be happening. It’s very, very scary stuff.”

By then, inflation permeated popular culture. In the opening credits of The Mary Tyler Moore Show, Mary tossed a package of meat into her shopping cart with a look of resigned disgust. We felt her pain. In a fantasy sequence on The Jeffersons, “King George” faced losing his (dry-cleaning) empire to the Dark Knight Inflation. He was saved by a bank loan — probably at double-digit interest.

On Saturday Night Live, Dan Aykroyd’s President Jimmy Carter gave a 1978 fireside chat urging Americans to fight inflation by burning 8% of their money. In Aykroyd’s most memorable turn as Carter, he counseled everyone to look on the bright side.

“Inflation is our friend,” he said. “Wouldn’t you like to own a $4,000 suit, and smoke a $75 cigar, drive a $600,000 car? I know I would!” Grin. In the “inflated world of the future,” he promised, “most Americans will be millionaires. Everyone will feel like a big shot.”

Fortunately, we aren’t living in that inflated world. The Federal Reserve under Paul Volcker managed to squelch inflation, at the cost of double-digit interest rates and the highest unemployment since the Great Depression. Asked decades later to name the most important legacy of the Great Inflation, he replied: “Don’t let inflation get ingrained. Once that happens, there’s too much agony in stopping the momentum.”

It took nearly a decade of low inflation rates to convince the public that inflation wouldn’t come roaring back. Long-term interest rates continued to build in a significant inflation premium. At my first job out of college, in the Wall Street Journal’s now-defunct Philadelphia bureau, I got a 9% cost-of-living raise. It was 1983, when inflation had dropped to 3.1%, but the union contract from the bad old days was still in effect. Just a few years earlier, 9% would have put us behind, especially after taxes.

The most important provision of the 1981 tax cuts was indexing tax brackets to inflation. Tax rates come and go, but indexing endures, preventing bracket creep even if inflation returns, as it has this year.

“That older people are worried about things that younger people are not, because they have lived through them, is of course every generation’s story,” writes Los Angeles Times television critic Robert Lloyd in a review of the new HBO series Station Eleven.

You may think us oldsters overly anxious as we worry about a resurgence of inflation. But you weren’t there.

BLOOMBERG OPINION

China’s local coronavirus infections edge higher

REUTERS
A RIDER travels on an empty road after lockdown measures to curb the spread of the coronavirus disease (COVID-19) in Xian, Shaanxi province, China, Dec. 26. — CNSPHOTO VIA REUTERS

BEIJING — China’s local symptomatic coronavirus cases crept up again, with most new infections reported in the northwestern city of Xian as it entered a fifth day of a lockdown.

Xian’s case load — 150 local symptomatic cases on Sunday versus 155 a day earlier — remains tiny compared with many clusters overseas, but it has imposed tough curbs on travel inside and out of town, underpinning Beijing’s drive to contain flare-ups as soon as possible.

The latest outbreak has led to 635 local confirmed cases in Xian, a city of 13 million people, during the Dec. 9-26 period, with no Omicron variant infections yet reported.

Across mainland China, a total of 162 domestically transmitted COVID-19 infections with confirmed symptoms were reported for Sunday, up from 158 a day earlier, according to official data on Monday. No deaths were reported for Sunday.

The new case number marks the highest count of local symptomatic infections since the daily bulletin provided by the National Health Commission started to classify asymptomatic carriers separately from end-March, 2020.

Mainland China had 101,277 confirmed cases since the start of the pandemic as of end Dec. 26, including domestically transmitted ones as well as those found among international travelers. The death toll remained at 4,636.

In Xian, a two-hour flight southwest of Beijing, residents cannot leave the city without approval from employers or local authorities, and households can send only one person to shop for necessities every two days. Other family members may not leave home unless they have essential jobs or urgent matters to attend to, approved by employers or communities.

Xian has launched a city-wide disinfection campaign, with staffers spraying pathogen-killing solutions on surfaces of roads and buildings. Residents are advised not to touch plants after the disinfection.

It also started a new round of mass testing on Monday, urging residents to stay at home except for having their sample collected.

Xianyang city and Weinan city, also in the Shaanxi province where Xian is based, reported one local symptomatic case respectively for Sunday. Local infections were also found in Guangxi region and the provinces of Zhejiang, Guangdong and Sichuan. — Reuters

Coronavirus can persist for months after traversing body

THE CORONAVIRUS that causes COVID-19 can spread within days from the airways to the heart, brain and almost every organ system in the body, where it may persist for months, a study found.

In what they describe as the most comprehensive analysis to date of the SARS-CoV-2 virus’s distribution and persistence in the body and brain, scientists at the US National Institutes of Health said they found the pathogen is capable of replicating in human cells well beyond the respiratory tract.

The results, released online Saturday in a manuscript under review for publication in the journal Nature, point to delayed viral clearance as a potential contributor to the persistent symptoms wracking so-called long COVID sufferers. Understanding the mechanisms by which the virus persists, along with the body’s response to any viral reservoir, promises to help improve care for those afflicted, the authors said.

“This is remarkably important work,” said Ziyad Al-Aly, director of the clinical epidemiology center at the Veterans Affairs St. Louis Health Care System in Missouri, who has led separate studies into the long-term effects of Covid-19. “For a long time now, we have been scratching our heads and asking why long Covid seems to affect so many organ systems. This paper sheds some light, and may help explain why long Covid can occur even in people who had mild or asymptomatic acute disease.”

The findings and the techniques haven’t yet been reviewed by independent scientists, and mostly relate to data gathered from fatal Covid cases, not patients with long COVID or “post-acute sequelae of SARS-CoV-2,” as it’s also called.

CONTENTIOUS FINDINGS
The coronavirus’s propensity to infect cells outside the airways and lungs is contested, with numerous studies providing evidence for and against the possibility.

The research undertaken at the NIH in Bethesda, Maryland, is based on extensive sampling and analysis of tissues taken during autopsies on 44 patients who died after contracting the coronavirus during the first year of the pandemic in the US. 

  The burden of infection outside the respiratory tract and the time taken to clear the from virus from infected tissues aren’t well characterized, particularly in the brain, wrote Daniel Chertow, who runs the NIH’s emerging pathogens section, and his colleagues.

The group detected persistent SARS-CoV-2 RNA in multiple parts of the body, including regions throughout the brain, for as long as 230 days following symptom onset. This may represent infection with defective virus particles, which has been described in persistent infection with the measles virus, they said.

“We don’t fully understand long Covid, but these changes could explain ongoing symptoms,” said Raina MacIntyre, professor of global biosecurity at the University of New South Wales in Sydney. Ms. MacIntyre wasn’t involved with the research, which she said “provides a warning about being blasé about mass infection in children and adults.”

“We don’t yet know what burden of chronic illness will result in years to come,” she said. “Will we see young-onset cardiac failure in survivors, or early onset dementia? These are unanswered questions which call for a precautionary public health approach to mitigation of the spread of this virus.”

In contrast to other COVID autopsy research, the NIH team’s post-mortem tissue collection was more comprehensive and typically occurred within about a day of the patient’s death.

The researchers also used a variety of tissue preservation techniques to detect and quantify viral levels, as well as grow the virus collected from multiple tissues, including lung, heart, small intestine and adrenal gland from deceased Covid patients during their first week of illness.

“Our results collectively show that while the highest burden of SARS-CoV-2 is in the airways and lung, the virus can disseminate early during infection and infect cells throughout the entire body, including widely throughout the brain,” the authors said.

The study provides pathologic data that support findings of previous research showing, for example, that SARS-CoV-2 directly kills heart muscle cells, and that those who survive an infection suffer cognitive deficits, said Ms. MacIntyre at the University of New South Wales.

‘VIREMIC’ PHASE
The N.I.H. researchers posit that infection of the pulmonary system may result in an early “viremic” phase, in which the virus is present in the bloodstream and is seeded throughout the body, including across the blood-brain barrier, even in patients experiencing mild or no symptoms. One patient in the autopsy study was a juvenile who likely died from unrelated seizure complications, suggesting infected children without severe COVID-19 can also experience systemic infection, they said.

The less-efficient viral clearance in tissues outside the pulmonary system may be related to a weak immune response outside the respiratory tract, the authors said.

SARS-CoV-2 RNA was detected in the brains of all six autopsy patients who died more than a month after developing symptoms, and across most locations evaluated in the brain in five, including one patient who died 230 days after symptom onset.

The focus on multiple brain areas is especially helpful, said Al-Aly at the Veterans Affairs St. Louis Health Care System.

“It can help us understand the neurocognitive decline or ‘brain fog’ and other neuropsychiatric manifestations of long Covid,” he said. “We need to start thinking of SARS-CoV-2 as a systemic virus that may clear in some people, but in others may persist for weeks or months and produce long Covid — a multifaceted systemic disorder.”  — Bloomberg

Xenophobia spills into Japan’s COVID-era debate on immigration

PEOPLE wear face masks at Shinagawa station during the rush hour in Tokyo, Japan, April 20, 2020. — REUTERS

FROM a ban on new foreign arrivals to a campaign against efforts to let non-citizens vote, a series of developments in Japan is raising new concerns about xenophobia in Asia’s second-largest economy.

Lawmakers in the Tokyo suburb of Musashino overruled the local mayor Wednesday and rejected a bill that would’ve allowed residents of other nationalities to vote on some issues. The decision came after several prominent Liberal Democratic Party legislators launched a campaign against the plan, with former Vice Foreign Minister Masahisa Sato warning on Twitter that “80,000 Chinese people” could move to the city and influence its politics.

Last month, Prime Minister Fumio Kishida’s government initiated new border controls that ban new entries by foreigners due to concerns about the Omicron variant of COVID-19. Separately, the US Embassy in Tokyo issued an unusual warning Dec. 6 about suspected racial profiling of foreigners by local police — an allegation the government has denied.

The incidents are feeding worries that Japan is souring on immigration as it approaches a third year of pandemic-driven border closures and economic upheaval. The government’s ban on arrivals by foreigners who lack existing residency status was backed by almost 90% of respondents in one media poll.

“It’s not only in Japan that the pandemic fanned xenophobic sentiments, but this is a country with a long-standing tradition of insular nationalist conservatism,” said Koichi Nakano, a professor of political science at Sophia University. “Already before COVID, nationalism was exploited by some politicians to divert public attention away from real domestic ills that they did not want to deal with. But since last year, there has been an excessive, unscientific, and inhumane focus on ‘offshore measures,’ such as the entry ban, by the Japanese government.”

While the island nation of 125 million has long been known for its hurdles to immigration, the government had warmed to overseas labor in recent years, because of the need to offset a shrinking workforce. The number of foreign workers in Japan more than doubled to 1.7 million in the seven years to 2020, many of them in the construction and service industries.

A poll by national broadcaster NHK carried out in March 2020, before the pandemic took hold in Japan, found that most respondents favored more immigration. The Tourism Agency still maintains a target of attracting 60 million foreign visitors in 2030.

The ban on foreign entries also runs counter to the LDP’s stated goal of bolstering Tokyo’s status as an international financial center by luring away global companies concerned about Beijing’s interference in Hong Kong. The number of foreign citizens living in Japan fell 2% to 2.8 million in June, compared with six months earlier, according to the Justice Ministry.

The response to Musashino Mayor Reiko Matsushita’s proposal to let some 3,000 non-citizens vote in local referendums illustrates the political forces against increased immigration. Ms. Matsushita told broadcaster TBS before the vote that she wanted “to make diversity into a strength and realize a multicultural society” in the city of 150,000.

“We’ll create a system whereby people have an opportunity to express opinions on important issues regardless of their nationality,” she said.

Non-Japanese aren’t permitted to vote in any local or national elections, by contrast with several countries in Europe, including the UK and Ireland. New York city this month also approved a measure allowing non-citizens to participate in local elections.

Japan narrows the path to enfranchisement for immigrants by banning dual citizenship. Still, two other Japanese districts have ordinances similar to the one Ms. Matsushita proposed, while more than 40 allow foreigners to vote in referendums under certain circumstances.

Besides Sato, who denounced the proposal as “no good,” a group of about 70 LDP lawmakers urged parliamentary action to prevent such efforts from advancing in the future. “It is the people of the country, not foreigners, who have the right to make decisions,” the group said in a statement.

Mr. Kishida’s top spokesman, Chief Cabinet Secretary Hirokazu Matsuno, declined to comment on the controversy.

Meanwhile, with omicron infections soaring globally and Japan’s daily Covid deaths in the single digits, Mr. Kishida has little incentive to ease the border measures. He frequently mentions that the country’s clampdown on entry is the most severe among Group of Seven nations and told reporters Tuesday that existing border controls would stay in place for the time being.

Thousands of overseas students who were scheduled to study at Japanese colleges are in limbo, some suffering severe financial losses as they wait for the borders to re-open.

“Japanese society’s discrimination against foreigners certainly existed before the entry ban,” said Atsuko Nishiyama, a lawyer representing a South Asian woman who is suing the Tokyo Metropolitan Government over alleged police harassment. “But I’m concerned Prime Minister Kishida’s message about banning foreigners will be taken as a stamp of approval by those who seek to set them apart and exclude them.” — Bloomberg

‘Horrified’ UN official condemns reported killings in Myanmar

FLOWERS hang during a nationwide flower campaign against the military coup in Yangon, Myanmar, April 2, 2021. — REUTERS

A SENIOR U.N. official said he was horrified by the reported killing of at least 35 civilians in Myanmar and called on authorities to investigate the incident that opposition activists blamed on government soldiers.

The ruling military has not commented on the incident near Mo So village in Kayah S tate on Friday and junta spokesman Zaw Min Tun could not be reached for comment.

State media reported that soldiers had fired on and killed an unspecified number of “terrorists with weapons” from forces fighting the military government. State media did not say anything about civilian casualties.

U.N. Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator Martin Griffiths said the reports of the killing of the civilians, including at least one child, were credible.

“I condemn this grievous incident and all attacks against civilians throughout the country, which are prohibited under international humanitarian law,” he said in a statement.

Mr. Griffiths called for “a thorough and transparent” investigation so the perpetrators could be brought to justice and called for the protection of civilians.

Residents and a human rights group working in the area said soldiers had killed the civilians. Photographs posted by the rights group showed charred bodies, some in the back of a burned-out truck.

Myanmar has been in turmoil since the military on Feb. 1 overthrew the elected government of Nobel Prize laureate Aung San Suu Kyi.

More than 1,300 people have been killed in crackdowns on protests and more than 11,000 have been jailed, according to a tally by the Association for Assistance of Political Prisoners rights group.

The military disputes the group’s death toll.

Some opponents of the military have taken up arms, some linking up with ethnic minority guerrillas who have for years been fighting the government for self-determination in various parts of the country, including Kayah State in the east.

The Save the Children aid group said two of its workers, traveling to their home villages for the year-end holiday, had gone missing in the attack. It suspended operations in Kayah State and parts of neighboring Karen State and the Magway region. — Reuters

Nikola Jokic’s big effort helps Denver Nuggets hold off Los Angeles Clippers, 103-100

DENVER Nuggets center Nikola Jokic (15) moves to the basket against Los Angeles Clippers center Ivica Zubac (40) during the second half at Crypto.com Arena. — REUTERS

NIKOLA Jokic had 26 points, matched his career best of 22 rebounds and also contributed eight assists as the visiting Denver Nuggets rallied to beat the Los Angeles Clippers 103-100 on Sunday night.

Will Barton scored 17, Davon Reed added 15 points and Austin Rivers and Monte Morris had 12 apiece for Denver.

Eric Bledsoe had 18 points and a season-high 10 assists, Brandon Boston, Jr. also scored 18 points and Ivica Zubac recorded 17 points and 11 rebounds for the Clippers.

Terance Mann had 11 points and eight assists and Serge Ibaka scored 10 for the Clippers.

The Nuggets missed their first two shots of the fourth and fell behind 86-79 before Rivers drained a 3-pointer to end the drought. Los Angeles increased its lead to 91-82 on Amir Coffey’s 3-pointer with 9:04 remaining but Denver found its offense.

Barton had a three-point play and a 12-foot jumper and Reed and Jokic hit buckets in an 11-2 run that tied it.

Zubac split a pair of free throws, Jokic drained a 3-pointer to put the Nuggets ahead 96-94 with 3:50 to play. Barton made a layup after a miss at the other end and Rivers’ second 3-pointer of the period made it 101-95 with 1:53 left.

A Denver turnover led to a 3-pointer from Luke Kennard to make it 101-100 with 19.7 seconds left. Jokic hit two free throws with 12.7 left and Boston missed a 3-pointer just before the buzzer.

Denver led by two after the first quarter but the Nuggets built a lead in the second. Reed hit a 16-footer and a 3-pointer and Bones Hyland made two layups in a 9-0 run that gave Denver a 46-35 lead. The Clippers got within six on Bledsoe’s three-point play but Barton’s five points put the Nuggets ahead 64-55 at halftime.

Denver continued to add to the lead to start the third quarter, going up 74-57 with 7:45 left but Los Angeles rallied.

Down 79-66, the Clippers scored 17 straight points while the Nuggets went cold for the final 5:34 of the period. They missed their final 12 shots and ended the quarter with two straight turnovers. Los Angeles outscored Denver 28-15 in the period. — Reuters

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