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Gov’t alters testing for foreign travelers to catch new strain

THE PHILIPPINES on Wednesday updated its testing protocols for foreign travelers to ensure the detection of new coronavirus strains.

Travelers arriving in the country will get tested for the coronavirus on the fifth day of their stay starting Feb. 1, regardless of origin, according to the presidential palace.

They must also get quarantined at a facility as soon as they arrive, presidential spokesman Harry L. Roque said in a statement on Wednesday, citing an order by an inter-agency task force (IATF) against the coronavirus.

“They shall then undergo reverse transcription-polymerase chain (RT-PCR) test on the fifth day from their date of arrival in the country, unless the passenger shows symptoms at an earlier date while on quarantine,” he added.

Before this, only foreigners from countries with known coronavirus strains were required to get tested on the fifth day.

Under the latest order, however, travelers from other countries need not get tested upon arrival at the airport.

The Department of Health (DoH) recommended the fifth-day test after co-passengers and the partner of a 29-year-old Filipino infected with a strain first detected in Britain tested negative upon arrival in Manila from the United Arab Emirates (UAE) on Jan. 7. They later tested positive for the coronavirus disease 2019 (COVID-19) virus.

Mr. Roque said the task force met on Tuesday to update the quarantine protocols for foreign travelers.

The Department of Health (DoH) reported 2,245 cases on Wednesday, bringing the total to 518,407. The death toll rose by 95 to 10,481, while recoveries climbed by 140 to 475,542, it said in a bulletin.

The Philippine death rate was at 2.02%, while the recovery rate was at 91.7%, it said.

There were 32,384 active cases, 84.5% of which were mild, 9.2% did not show symptoms, 3.4% were critical, 2.4% were severe and 0.48% were moderate. .

Baguio City and Cebu City reported the highest number of new cases at 121 each, followed by Davao City at 102, Quezon City at 87 and Pangasinan at 81.

DoH said three duplicates and a case that had tested negative were removed from the tally, while 19 recovered cases were reclassified as deaths. Four laboratories failed to submit their data on Jan. 26.

About 7.2 million Filipinos have been tested as of Jan. 25, according to DoH’s tracker website.

The coronavirus has sickened more than 100.9 million and killed about 2.2 million people worldwide, according to the Worldometers website, citing various sources including data from the World Health Organization (WHO).

About 72.9 million people have recovered, it said.

The Philippines on Jan. 15 extended the travel ban on more than 30 countries with confirmed cases of the more contagious COVID-19 variant until the end of the month.

Included in the ban are the UK, Denmark, Ireland, Japan, Australia, Israel, the Netherlands, China, Hong Kong, Switzerland, France, Germany, Iceland, Italy, Lebanon, Singapore, Sweden, South Korea, South Africa, Canada, Spain, the United States, Portugal, India, Finland, Norway, Jordan, Brazil, Austria, Pakistan, Jamaica, Luxembourg, Oman, United Arab Emirates and Hungary. — Vann Marlo M. Villegas and Kyle Aristophere T. Atienza

More samples tested for COVID-19 strain — health authorities

CORONAVIRUS samples from northern Philippines, where health authorities have observed clustering, would be checked if these are strains similar to the one first detected in the United Kingdom (UK), according to the Department of Health (DoH).

“We’ve been taking samples from areas with clustering since we started sequencing,” Health Undersecretary Maria Rosario S. Vergeire told an online briefing in Filipino on Wednesday.

Virus samples from hospitals with severe and critical cases as well as in jails would also be checked for the new strain, she added.

There were now 17 people in the Philippines with the more contagious UK variant, 12 of whom are from Bontoc, Mountain Province in the country’s north.

Ms. Vergeire said they have identified eight returning overseas Filipinos in the Cordillera Administrative Region and will get details of their swab tests to determine the source of the infection. At least 615 contacts had been traced in the region, she added.

The DoH on Monday confirmed there was a local transmission in Bontoc and clustering of cases in the town of Samoki, where 11 of the 12 cases with the new variant came from.

The clustering was reported to have begun with a returning overseas Filipino from the United Kingdom on Dec. 11 who had tested negative upon arrival.

He was tested for the coronavirus after complaining of abdominal pains a few days after and was found to have been positive. He was, however, negative for the UK variant.

Regional health authorities and local governments conducted “backward tracing exposures and travel histories of cases to identify other possible sources of infection,” DoH said, adding that it would check other returning migrant Filipinos.

Thirty-four other contacts of the traveler from the UK tested positive for the coronavirus, six of whom were negative for the new variant. The results of the remaining 28 were pending. — Vann Marlo M. Villegas

Nationwide round-up (01/27/21)

Essential workers to be included in priority list for COVID vaccination

PRIVATE sector employees, especially those classified as essential workers, will be among the government’s priority in the coronavirus immunization program, the country’s vaccine czar said on Wednesday.

In a televised press briefing, Secretary Carlito G. Galvez, Jr. said “members of economic sectors” or essential workers will be next in line after health workers in the government’s inoculation drive against the coronavirus disease 2019 (COVID-19).

The country’s immunization drive is expected to be rolled out by the end of February.

Some of the country’s big companies, along with the government, have signed purchase deals for COVID-19 vaccines.

Essential workers, based on the definition set by the national task force handling the coronavirus response, include those in transportation service, supermarkets, food production and delivery, and other basic necessities.

The vaccination priority list earlier released by the government includes medical frontliners, senior citizens, indigents, and uniformed personnel.   

At the same briefing, Mr. Galvez said the Philippine’s “best case scenario” is to inoculate as many as 70 million Filipinos against the coronavirus by the last quarter of 2021.

The “worst case scenario,” on the other hand, is to vaccinate the majority of the population “in the first semester of 2022.”

“We will not reach 2023,” he said.

VIMS
Meanwhile, the Department of Information and Communications Technology (DICT) has been authorized to partner with private technology firms for vaccine monitoring and reporting.

Presidential Spokesperson Harry L. Roque, Jr. on Wednesday said the DICT has been given the authority to procure the services of a qualified third-party service provider for the design approval, IT project implementation, and service management of the Philippine COVID-19 Vaccine Information Management System (VIMS).

“The functions of the Philippine COVID-19 VIMS shall include Citizen Vaccination Capture and Automation; Provide Management and Automation; Supply Chain Management; and VIMS Dashboarding, Reporting, and Analytics,” Mr. Roque told reporters in a Viber message.

A number of local governments have already announced that they will be using their own quick response code systems, which already contain data of residents, for the COVID-19 vaccination program. — Kyle Aristophere T. Atienza

Solon assures proposed constitutional changes will not include term extension for elected officials

A lawmaker said proposals in revising the 1987 Constitution will not include allowing term extensions and/or limits to elected officials. AKO-BICOL Party-list Rep. Alfredo A. Garbin, Jr., chair of the House of Representatives committee on constitutional amendments, said congressmen will strictly stick to revising economic provisions.

“Walang (No) term extension, walang lifting of term limit, walang political provisions,” he said in a statement on Wednesday, adding the intention of the revision is to “help the economy recover from the effects of the COVID-19.”

Mr. Garbin issued the statement after economic leaders questioned in a hearing on Tuesday the timing of the charter change, with the local and national polls scheduled in May 2022.   

In a separate briefing on Wednesday, Rizal 1st District Rep. Michael John R. Duavit agreed to the suggestion of holding discussions on charter change with the Legislative-Executive Development Advisory Council (LEDAC).

The suggestion was made during a Tuesday committee hearing by former Finance secretary Margarito B. Teves.

“It is something to be discussed, that should be discussed by the House and the Malacañang and the Senate,” he said.

Meanwhile, Senate President Vicente C. Sotto III said the two chambers will likely vote separately when it convenes as a Constituent Assembly.

“Indeed, it is correct that we vote separately. The Constitution mentions voting separately perhaps three or four times and only once it mentioned the we vote jointly and it’s only in the case of martial law,” Mr. Sotto said during a panel hearing on proposed constitutional amendments on Wednesday.

“I think that issue is resolved. And hearing from the Speaker (Lord Allan Q. Velasco) and the chairman of constitutional amendments committee, they agree,” he said.

The panel, composed of the committees on constitutional amendments and revision of codes, was tackling Senate Joint Resolution No. 1 and Resolution of Both Houses Nos. 1 and 2, which proposed to either convene the Constitutional Assembly or amend economic provisions of the Constitution.

Retired Supreme Court Associate Justice Adolfo S. Azcuna said the voting should be done separately, considering the nature of the Philippine Congress.

“I agree that because of the bicameral nature of Congress, they should vote separately,” he said, noting he also agrees the House and the Senate should hold a joint meeting when they vote. — Charmaine A. Tadalan and Gillian M. Cortez

Airlines reiterate appeal for gov’t to standardize travel requirements to boost domestic market

THE country’s air service providers have reiterated their appeal for government to standardize the travel requirements across the country to encourage more domestic passengers.

Air Carriers Association of the Philippines (ACAP) Executive Director and Vice-Chairman Roberto C. O. Lim said this year should be focused on boosting passenger confidence as they promote domestic flights. Part of this confidence-building is a unified framework for all local government units that will make requirements less confusing for travelers, he said.

“We should really adopt a risk management approach that will allow air transport to grow, to fly more destinations in a calibrated and safe way,” Mr. Lim said in a hearing by the House of Representatives committee on transportation on Wednesday.

ACAP is composed of the country’s three major domestic service providers, AirAsia Philippines, Cebu Pacific, Philippine Airlines, and their affiliates.

Eldric Paul A. Peredo, Civil Aeronautics Board’s Air Operating Rights Division chief, reported during the hearing that international and domestic passengers logged in by air carriers from the first to third quarters of 2020 were only 25% of the total passengers recorded in 2019.

Most airports across the country are already accepting commercial flights and several popular tourist destinations have reopened to local visitors. — Gillian M. Cortez

Regional Updates (01/27/21)

Baguio city gov’t orders hotel to explain health protocol violations but mayor tells celebrity party host ‘not to worry’ over probe

THE Baguio City government has ordered the hotel that served as a venue for a party where attendees breached health protocols to explain why it should not be penalized, but the event’s host has been told by the mayor, who was among the guests, “not to worry.”  “The city government gives hotel 72 hours to explain why it should not be sanctioned over celebrity party protocol breach,” it said in a post on its official Facebook page. The Department of Tourism (DoT), in a statement on Tuesday afternoon, also said its regional office is already investigating the incident and a “Notice to Explain” has been issued to the hotel. On the other hand, Mayor Benjamin B. Magalong who attended the party along with his wife, said the birthday party’s host, celebrity Tim Yap, would be given consideration in light of his “contributions to Baguio City.” “Don’t you worry about it. Your contributions to Baguio City, promoting, you’ve been saying good words about Baguio, the help that you’ve extended to our artists — we’re considering all of this,” Mr. Magalong narrated in mixed English and Filipino in an interview with ABS-CBN. The mayor, a former police officer and the designated contact tracing ‘czar’ of the national government, cited that Mr. Yap’s group purchased several local artworks at an exhibit. In a separate streamed interview with the local media on Wednesday, Mr. Magalong said the people at the party who will be proven to have violated protocols will be “fined.” Mr. Yap, in an interview with CNN Philippines, apologized over the incident saying his intent was to promote tourism. — MSJ

Senate committee approves bill for establishment of quarantine facilities per region

THE Senate health panel has approved a measure that will mandate and fund the establishment of quarantine facilities across the country. Senate Bill No. 2023, the proposed Quarantine Facilities Act, provides that fully equipped quarantine facilities be built in every region. Funding for these facilities will also cover the supply of adequate food, clothing, means of communication and competent health care for the temporary dwellers. The facilities will be managed by the Department of Health (DoH), in coordination with the local government units (LGUs). Funding will be sourced from the annual budget of the DoH. The Health department will also be tasked to determine the use of the facilities in the absence of health emergencies. A few local governments have already built permanent quarantine facilities in response to the coronavirus pandemic, but most have temporary units using existing structures or container vans, including those set up by the Department of Public Works and Highways (DPWH). — Charmaine A. Tadalan

PHL rebound from low base seen outpacing regional peers

THE ECONOMY’S rebound in 2021 is expected to be larger than those of its regional peers because it will be coming off a low base in 2020 due to the prolonged lockdown, Oxford Economics said.

In a note released Wednesday, Oxford Economics said Vietnam and the Philippines will grow faster than the rest of a peer group it calls the ASEAN-6, whose other members are Indonesia, Malaysia, Singapore and Thailand.

“We expect a solid rebound in growth this year across the region. Vietnam and the Philippines are set to outpace the rest, although in the case of the Philippines this reflects low base effects after last year’s sharp contraction,” it said.

Oxford Economics expects the Philippine economy to rebound by 7.7% this year after an estimated 10% slump in 2020, the deepest contraction of gross domestic product (GDP) in the region.

“Thailand and the Philippines have lagged. Travel restrictions have weighed on the recovery in Thailand, despite its earlier success in controlling infections, while prolonged lockdowns have weighed on activity in the Philippines,” it said.

Quarantine restrictions in the Philippines have been eased to a more relaxed form in late 2020 but travel is still limited and subject to health protocols.

The Philippine Statistics Authority will report on Thursday official GDP data for the fourth quarter and for 2020.

A BusinessWorld poll last week yielded a median estimate of a GDP contraction of 8.5% for the fourth quarter and a 9.5% contraction in 2020.

The economy shrank by 10% in the first nine months of 2020, declining by 0.7%, 16.9%, and 11.4% in the first to third quarters, respectively.

Leading the region’s recovery, Oxford Economics projected Vietnam’s economy to grow 7.7% this year after it posted an estimated 2% gain in 2020, owing to the country’s successful containment of its coronavirus disease 2019 (COVID-19) outbreak.

“Vietnam has been a clear winner, as its successful containment of infections has led to faster normalization in activity, with GDP already back above pre-COVID-19 levels,” it said.

It expects both Singapore and Malaysia to expand by 5% this year, followed by Indonesia with 4.7% growth and Thailand with 4.3%.

The regional GDP growth average for the ASEAN-6 is projected at 5.3% in 2021.

“An upside scenario based on faster vaccine rollout could see ASEAN-6 average GDP increase by nearly 10% in 2021. But in a scenario with slower vaccine rollout and a surge of infections, the regional recovery will be delayed to 2022,” Oxford Economics said.

Mobility restrictions are expected to be further relaxed over the next two months, especially for the worst-hit countries, to support their economic recovery.

The extent of the rebound, however, relies on the swift rollout of vaccination programs, with Singapore expected to be the first among the six to reach herd immunity, with 87% of its population set to be vaccinated by the end of 2021.

Oxford Economics said the Philippines is expected to have vaccinated 35% of its population by the end of the year, while the mass immunization program in Indonesia may take 12-15 months to cover two-thirds of its population.

“The start of vaccinations should buoy consumer and business confidence across the region, spurring an improvement in service sector activity, including ‘social spending’ and domestic tourism. But we expect tourism-related sectors to be the last to recover as border controls remain in place,” it said.

Recovery in global trade will also contribute to a stronger rebound for the region, with the manufacturing sector in the Philippines only seen picking up when lockdowns are eased further.

“We expect macroeconomic policies to remain supportive of the recovery and we do not look for any sharp unwinding in support this year,” it said.

“Despite our strong growth projections for this year, we believe that a return to the pre-pandemic ‘trend growth’ will take longer. We also think there will be some lasting economic scars due to the pandemic, including a slow labor market recovery with the risk of some permanent job losses and lower capital accumulation,” it added. — Beatrice M. Laforga

Infra push seen closing telecommunications, transportation gaps

THE FLAGSHIP ‘Build, Build, Build’ (BBB) program is addressing the Philippines’ infrastructure deficit in telecommunications and transportation, but is less responsive to the needs of social programs, a government think tank said.

According to a study released by the Philippine Institute for Development Studies (PIDS), ‘Build, Build, Build’ supports the key development goals of the government as laid out in the medium-term Philippine Development Plan (PDP).

“The program is particularly responsive in the areas of information and communications technology [ICT], transport and mobility, water resources, and power and energy,” according to Janet S. Cuenca, a former research fellow at PIDS, in a statement Wednesday.

However, the study found that there were “no major capital projects addressing the PDP targets in the area of social infrastructure (e.g., school buildings and health facilities), and technology adoption and innovation.”

The PDP 2017-2022 is the medium-term socioeconomic development plan that lays out the government’s targets and priorities.

Citing the study, known as “Review of the ‘Build, Build, Build’ Program: Implications on the Philippine Development Plan 2017-2022,” PIDS noted that internet connectivity has improved according to the 2018 Socioeconomic Report of the National Economic and Development Authority (NEDA).

ICT-related projects that have been rolled out include the Luzon Bypass Infrastructure Project and the National Broadband Program. The former established a high-speed information highway meant to improve the speed, affordability and accessibility of broadband internet. Meanwhile, the National Broadband Program installed fiber optic cable and wireless systems.

“A measure of how far or near the various projects under the BBB program in attaining the targets (i.e., actual accomplishment vis-à-vis targets) is a useful information that can prompt implementers to identify issues and challenges (i.e., including enabling and stumbling factors) and subsequently draw up appropriate policy measures,” Ms. Cuenca said.

In the transport sector, PIDS noted that travel time has been reduced while mobility increased in parts of the country, according to a 2019 NEDA report. Projects in this space include the Binalonan to Pozorrubio Section of Tarlac-Pangasinan-La Union Expressway, which cut travel time to 45 minutes from 150 minutes previously on the Tarlac-Pozorrubio segment.

The PIDS noted that the government’s plan to invest in the construction and rehabilitation of small-scale and community-based irrigation projects is in line with the goal to improve the productivity and sustainability of the agriculture sector.

As of August, there were six ongoing major irrigation projects, she said, the largest among them the P14.8-billion Jalaur River Multipurpose Project – Stage II in Iloilo and the P13.4-billion Balog-Balog Multipurpose Project Phase II in Tarlac.

The Jalaur River project is expected to help 22,000 farmers and their families in 23 municipalities and two cities address irrigation issues, while the water project in Tarlac is scaled to provide irrigation services for 34,500 hectares.

Government programs to provide electricity to remote areas are also aligned with the goal to power up 100% of all households by 2022, according to the report. — Beatrice M. Laforga

Weak post-pandemic growth a risk to job revival — IIF

WEAK GROWTH in the wake of the pandemic may not create jobs fast enough, potentially worsening inequality, according to the Institute of International Finance (IIF).

“(Weak growth) makes income inequality harder to address and debt tougher to service, among others. At an even more basic level, low growth may not create enough opportunities for job seekers,” it said in a report Wednesday.

The economy is likely to have contracted last year, with the gross domestic product (GDP) retreating by a revised 11.4% in the third quarter, according to the Philippine Statistics Authority (PSA) Wednesday. Fourth quarter and full-year data will be reported today, Thursday.

In 2021, economic managers are expecting GDP to grow between 6.5% and 7.5%.

The job market may only return to its pre-COVID levels by 2022, according to Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, noting that some industries including services may even see a recovery in 2023.

“It is not that jobs will not come back, but they will come back slower than expected. Some jobs may not even come back altogether,” Mr. Asuncion said in an e-mail. —

Joblessness in October was 8.7%, equivalent to 3.813 million people unemployed, according to the PSA. This represents an improvement from the 10% unemployment rate in July, equivalent to 4.571 million jobless. The year-earlier figures were 4.6% and 2.045 million jobless.

Unemployment peaked at 17.6% or 7.228 million jobless in April, the height of the lockdown.

Asian Institute of Management Economist John Paolo R. Rivera said sustained low demand and restrictions on movement have continued to impact the workforce as enterprises are not yet at full operations.

“However, there are industries that are thriving particularly the BPO (business process outsourcing), offshore and shared services sector whose demand is now being driven by the faster recovery of other countries relying on this service,” Mr. Rivera said in an e-mail.

He said improved confidence by both business and consumers, appropriate easing of some business restrictions and the reduction in infection cases will be key to the recovery in jobs.

“Hence, the government can help soothe job market conditions if it can lay out a concrete national vaccination plan that may increase demand- and supply-side confidence in the market, thereby improving job market conditions,” Mr. Rivera said. — Luz Wendy T. Noble

Industry backs no Thai tariff action, citing supply disruption

INDUSTRY GROUPS have declared their opposition to the potential suspension of tariff concessions on exports from Thailand to the Philippines, warning that regional supply chains could be disrupted and consumer prices might rise.

The Trade department is requesting authorization from the World Trade Organization (WTO) to suspend tariff concessions in retaliation against Thailand in a 13-year trade dispute.

Industry representatives from both the Philippines and Thailand presented their case in a public hearing of the Tariff Commission Wednesday, in which the commission presented the 112 proposed product lines for which concessions could be suspended.

The list includes cars, materials for plastic goods, air-conditioning, and flavor enhancers for food products.

The WTO in March suspended consideration of Philippine retaliation against Thailand, after which the Trade department said it would continue to pursue the matter with the international body.

The Philippines first complained in 2008 of Thailand’s customs valuation of Philippine cigarette exports, which the WTO decided in favor of the Philippines two years later.

The trade department in November 2019 said it sought to impose retaliatory measures against Thailand’s automotive exports to the Philippines for non-compliance with the WTO ruling. But trade representatives from Thailand said that the Philippine request ignores procedural rules, as it was made outside of the timeframe prescribed by the WTO.

The Federation of Thai Industries (FTI) during the hearing listed more than a dozen industries that could be hurt by retaliation, including automotive, air conditioning, food, plastic, and steel companies.

“The Philippines and Thailand are in the network of production from raw materials, intermediate (products) to finished goods. We depend on each other, so by this kind of retaliation… would hurt both sides,” FTI Vice-Chairman Nilsuwan Leelarasamee said.

Raised tariffs could increase the prices of machines for farming and soybean products, resulting in higher consumer prices in the Philippines, he added.

Car industry groups from both countries also pushed back against the proposal.

“Completely built up units from Thailand play a critical role in the automotive market mix. The imposition of additional duty, whether in the form of safeguard or retaliatory measure, will drastically increase the prices of vehicles offered to the market,” Chamber of Automotive Manufacturers of the Philippines, Inc. President Rommel R. Gutierrez said.

The Thai Automotive Industry Association noted that car manufacturers on both sides participate in a sophisticated regional supply chain, the disruption of which could have economic and political consequences.

Philippine Plastics Industry Association, Inc. President Danny Ngo said that the inclusion of Thai exports of materials used by Philippine-based plastics manufacturers will increase the cost of domestic production, making producers here less competitive against finished goods imports.

In response, Trade Assistant Director Angelo Salvador M. Benedictos said that the trade dispute has gone unresolved since it began in 2008.

“The issue has been brewing since 2008… and we have not found any solution despite the fact that the Philippines won the case, won all the appeals,” he said.

“Much has been said to the possible damage to both sides. We have of course thought about all of those and we will try… to minimize whatever the damage — hopefully not to ourselves.”

Mr. Benedictos said that the Philippines will proceed with the suspension once it receives authorization from the Dispute Settlement Body of the WTO and after the Trade department goes through its internal processes. — Jenina P. Ibañez

Palay farmgate prices rise 1.2% in first week of Jan.

THE average farmgate price of palay, or unmilled rice, rose 1.2% week-on-week to P16.70 per kilogram during the first week of January, with the price improving 4.6% from a year earlier, according to the Philippine Statistics Authority (PSA).

In its weekly update on palay, rice, and corn prices, the PSA said the average wholesale price of well-milled rice fell 0.2% to P37.31 while the retail price was flat at P40.89.

The average wholesale price of regular-milled rice fell 0.2% to P33.33 while the retail price fell 0.1% to P36.15.

The farmgate price of yellow corn grain rose 1.4% week-on-week to P12.52.

The average wholesale price of yellow corn grain rose 0.8% to P19.99 while the retail price fell 1% to P24.45.

The farmgate price of white corn grain rose 1.1% week-on-week to P13.49.

The average wholesale price of white corn grain rose 2.1% to P17.17 while the retail price rose 0.9% to P25.87. — Revin Mikhael D. Ochave

IP filings drop in 2020; rebound seen with economic reopening

INTELLECTUAL PROPERTY (IP) filings declined in 2020 as inventors and creatives delayed the filing of applications during the lockdown declared to contain coronavirus disease 2019 (COVID-19).

The Intellectual Property Office of the Philippines (IPOPHL) said applications for trademarks dropped 10% year on year to 35,274, while applications for patents fell 9% to 3,648.

Utility model filings declined 45% to 1,235, while industrial design filings fell 23% to 1,259. Copyright deposits fell 44% to 940.

IPOPHL Director General Rowel S. Barba said in a statement Wednesday that the lower number of IP applications was expected as economic uncertainty dampened investment in intangible assets.

“But with the gradual opening up of the economy and the anticipated vaccine rollout, we hope to see more fresh investments in IP assets this year,” he said.

Mr. Barba said that he is hoping that recovery will mirror the growth in filings after the 2008 global financial crisis.

Past global crises, he added, have caused the closure or repurposing of less-efficient firms and emphasized the competitiveness of more dynamic companies.

“Historically, those who put research and innovation at the center of their strategies are those who stand out and thrive in the face of disruption,” he said.

“Thus, lower filings may signal a redirection of growth paths, favoring the highly competitive and innovative, rather than stymied innovation.”

IPOPHL plans to continue digitizing its operations to widen access to its services. —  Jenina P. Ibañez

DoF says rollout of online systems on track this year

THE Department of Finance (DoF) is set to launch various electronic channels this year that will digitize tax-related processes, including an online platform for tax exemption applications, as well as an online business registration system and the electronic-invoicing system of the Bureau of Internal Revenue (BIR).

The DoF said in a statement Wednesday that the electronic Tax Exemption System of its Revenue Operations Group (ROG) will be launched this quarter, in which importers can request duty and tax exemptions and track the status of their applications.

Last year, the government approved 16,650 tax exemption applications which resulted in P12.5 billion in foregone revenue according to Finance Undersecretary and Head of ROG Antonette C. Tionko.

Meanwhile, the BIR’s Online Registration and Update System (ORUS) is set to be operational by August, according to Ms. Tionko, while the rollout of an e-invoicing system will proceed as scheduled this year.

ORUS will serve as a platform for business and individual taxpayers to register and update their details with the bureau.

For the e-invoicing system, she said business process reengineering and information strategy planning for the project has been completed. The bureau is also currently working on the “development of the value-added tax (VAT) system, installation of the ICT infrastructure and the capacity building aspect of the project.” The project tapped the Korea International Cooperation Agency for a $7.3-million grant to aid in its rollout.

“The e-invoicing system we are developing is capable of processing and storing electronic invoices issued by taxpayers in near real time. This will make it easy to issue digital receipts and capture and upload the data in the receipt to a centralized database,” Ms. Tionko said.

The system also has an e-Sales reporting system that summarizes the data on digital invoices and receipts.

Tax returns filed with the BIR online totaled 21.48 million last year, accounting for 94% of all returns. Taxes paid through e-channels amounted to P1.665 trillion, equivalent to 86% of the bureau’s revenue in 2020.

This year, BIR Commissioner Caesar R. Dulay said the bureau is targeting a level of 100% electronic tax returns.

Ms. Tionko added that the ROG is due for partial completion of its One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS) this quarter, while the Transfer Tax Credit Certificates and Tax Debit Memos of the OSS will be launched by year’s end.

The BIR collected P1.94 trillion last year, down 11% year on year but 15% higher than the P1.69-trillion downward-revised target. — Beatrice M. Laforga

Ending the long heartbreak over RPTs in PPPs

“Shot through the heart, and you’re to blame, darlin’ you give love a bad name” — go the opening lines of a famous Bon Jovi song. In December, the Court of Tax Appeals (CTA) sitting En Banc resolved an issue that often strikes (or shoots, if you will) at the very heart of national Public-Private Partnership (PPP) projects — real property taxes (RPT).

This issue is a prominent one for national-level PPPs in the transportation sector, such as roads and railways, which often traverse multiple cities and municipalities. In 2013, the LRT Line 1 Cavite Extension PPP Project had to be rebid due to, among others, the significant RPT that had to be shouldered by the winning proponent. In the same year, the bidders of the Cavite-Laguna Expressway (CALAX) PPP Project — a 44.63-kilometer toll road connecting Manila-Cavite (CAVITEX) and South Superhighway (SLEX) — likewise expressed concerns about the impact of RPT on the project’s financial viability.

In the recently promulgated CTA case (CTA EB No. 2078), the local government unit (LGU) assessed the proponent of a railway project deficiency RPT that ballooned to a billion pesos by the time the Warrant of Levy was issued. The subject of the levy? Railways, train cars, and railway stations. Not surprisingly, this prompted the national government (through the Department of Transportation or DoTr) to file a complaint and prevent the auction and transfer of ownership of the properties. From then on, a legal battle spanning a decade and a half ensued.

Of particular interest here is the Build-Lease-and-Transfer (BLT) arrangement entered into between the national government and the proponent — the crux in the issue of whether the proponent is indeed liable for RPT. Republic Act No. 7718, otherwise known as the Build-Operate-and-Transfer (BOT) Law, defines build-lease-and-transfer as a contractual arrangement whereby a project proponent is authorized to finance and construct an infrastructure facility, and upon its completion, turn it over to the government on a lease arrangement for a fixed period, after which, ownership of the facility is automatically transferred to the concerned government agency or local government unit. In sum, it is a “finance-lease” type of arrangement, similar to how car loans are typically financed.

The LGU assessed the proponent during the “revenue period,” which is the period after construction (hence the government was already in possession and operating the facility) but prior to the transfer of ownership by the proponent. It argued that the proponent is liable for RPT since, during the assessment period, the properties were still privately-owned and were used for commercial and revenue purposes.

The CTA ruled in favor of the DoTr and the proponent, citing two reasons.

First, it noted that the BLT arrangement is more of a financing mechanism where the government is obligated to make amortized payments to the proponent, which in turn, will be sourced from operating the infrastructure facility. In other words, the government becomes not just a mere possessor of the facility, but also its beneficial owner.

Second, considering that the properties are intended for and devoted to public use, the CTA ruled that following Article 420 of the Civil Code, they are considered part of public dominion, and thus, owned by the government. As such, the properties are considered exempt from RPT following Sections 133(o) and 234(a) of the Local Government Code. The Tax Court also cited the case of MIAA vs. CA (GR No. 155650, 20 July 2006), where the Supreme Court ruled that properties of public dominion cannot be the lawful subject of an auction sale.

The CTA likewise took exception of the fact that the DoTr’s Petition for Review was filed only after nearly 10 years from the promulgation of the assailed Orders of the Regional Trial Court (RTC) — which was way beyond the 60-day period allowed under the Rules of Court — citing a litany of cases where the Supreme Court relaxed technicalities “to serve substantial justice and safeguard strong public interest.”

While there are other available remedies — Section 277 of the Local Government Code, for example, gives the President the power to condone such taxes when the public interest so requires (former President Benigno S.C. Aquino III, in fact, exercised this authority when he issued Executive Order Nos. 27 [s.2011] and 173 [s.2014] to condone RPT on power generation facilities under BOT contracts with Government-Owned or -Controlled Corporations) — the CTA decision is nevertheless an important victory for private sector participation in infrastructure projects.

The CTA decision could potentially end the long heartbreak over the payment of RPT for PPP projects. Could it have potentially avoided a rebid of the LRT Line 1 Cavite Extension PPP Project? Perhaps. Applying the reasoning of the CTA, such infrastructure facilities are considered part of public dominion and are therefore owned by the government. Perhaps we will only really know once the decision becomes final.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only and should not be used as a substitute for specific advice.

 

Jose Patrick S. Rosales is a lawyer and an Infrastructure & Tax Senior Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

jose.patrick.s.rosales@pwc.com

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