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Lawmaker seeks to double budget for power cooperatives

A SENATOR asked his fellow lawmakers on Monday to double the 2021 budget for the restoration of power facilities damaged by recent typhoons.

Senator Sherwin T. Gatchalian, who heads the energy committee, said the additional subsidy would help electric cooperatives restore their power lines and infrastructure.

In a statement, The lawmaker proposed another P550 million on top of the P200-million fund for electric cooperatives nationwide. The budget is managed by the National Electrification Administration (NEA).

Typhoon Vamco, locally named Ulyssess, killed at least 73 people and damaged P151.4 billion worth of power facilities, according to estimates by the agency.

Meanwhile, the Senate passed a resolution asking the Social Welfare department to fast-track the release of funds for those affected by the coronavirus pandemic and recent typhoons.

The Senate found that the agency had not released P75 billion from its 2020 budget and P6.7 billion under twin laws that provided subsidies to the poor amid the pandemic.

At Monday’s session, Senator Juan Miguel F. Zubiri said the funds would greatly ease the suffering of farmers who lost their crops to the typhoons.

The past three typhoons that hit Luzon island caused P10 billion worth of crop and fishery damage, according to the Agriculture department.

Also on Monday, Speaker Lord Allan Q. Velasco said the House probe of flooding in several parts of Luzon would seek “long-term solutions” and not just find fault.

“We hope to hear everyone’s side and get a clearer picture of the events that transpired when Typhoon Ulysses struck and caused widespread flooding in Luzon,” he said in a statement. “The aim here is to come up with solutions and legislation, if needed, to prevent the unnecessary loss of lives and properties during typhoons.”

The House agriculture committee has invited officials from the National Irrigation Administration and the local governments of Cagayan and Isabela for Tuesday’s hearing. — Angelica Y. Yang, Kyle Aristophere T. Atienza and Charmaine A. Tadalan

Nationwide round-up (11/23/20)

Gov’t may reconsider cap on health workers leaving for abroad

THE PHILIPPINE government may still expand the cap on the number of health workers allowed to leave for overseas jobs, currently set at 5,000 annually, according to a Labor official. “We are just making sure that our capacity in health institutions won’t be affected here while we still need to fight the pandemic,” Philippines Overseas Employment Administration (POEA) Administrator Bernard P. Olalia said in a briefing on Monday. The POEA will soon release the guidelines on health workers qualified for deployment following President Rodrigo R. Duterte’s approval of the recommendation to lift the ban imposed in mid-March. Palace Spokesperson Harry L. Roque, in a separate briefing, said the 5,000 limit will take effect January 1. Mr. Roque said the administration will continue to assess how it can balance the country’s need for healthcare workers with allowing medical personnel to seek opportunities abroad. — Gillian M. Cortez

Fight for justice not over for families of Maguindanao massacre victims

THE DEPARTMENT of Justice recommended the filing of charges against only eight out of the 48 suspects in the 2009 Maguindanao massacre case, the lawyer of the families’ victims said. Lawyer Nena A. Santos said they received the resolution dated August 28, 2019 only last month, where only eight were indicted for multiple murder over the killing of more than 50 people including 32 journalists. “We’re now on the 11th year and we are still here because there are still matters that has to be considered and there are matters that needs to be acted upon because the fight is not yet over,” Ms. Santos said in an online briefing. The complaint against the 40 suspects were dismissed for lack of probable cause as they may have attended some of the supposed meetings but they did not take part in the actual killings, according to prosecutors. Ms. Santos said they have filed a motion for reconsideration over the dismissal of the complaint against the 40. The prosecutors said six of the indicted were among those who attended the meetings and participated in the shooting of the victims. It also said that evidence against seven of them “remains uncontroverted” for failing to participate in the preliminary investigations. A police officer who led his men in blocking the convoy of the victims is among those indicted. The Maguindanao massacre, which took place on Nov. 23, 2009, is considered the worst election-related violence and journalist killing in the country. A Quezon City court in December last year convicted  former Maguindanao Mayor Datu Andal “Unsay” Ampatuan, Jr. and his brother Zaldy, who is a former governor of the Autonomous Region in Muslim Mindanao, and 26 other principal accused for 57 counts of murder. More than a dozen were convicted as accessories to the crime while 50 others were acquitted. They were ordered to pay P129.57 million in damages to the heirs of the victims. All of the accused were acquitted of one murder count of reasonable, over the death of photojournalist Reynaldo Momay whose body was not found at the crime scene. Only his denture and jacket were found and his name and signature were on the attendance sheet in the convoy. Ms. Santos said appeals for the first wave of convictions are now with the court of appeals. The Palace, meanwhile, renewed its pledge to help pursue justice for the victims. In a briefing on Monday, Palace Spokesperson Harry L. Roque said law enforcement agencies would not stop efforts to catch suspects who are still at large. — Vann Marlo M. Villegas and Gillian M. Cortez 

Bill addressing ‘spaghetti wires’ passes committee level

A CONSOLIDATED bill mandating the proper installation and maintenance of overhead wires for power, telecommunication, and cable passed committee level at the House of Representatives on Monday. The committees on information and communications technology and on energy approved a still unnumbered bill which consolidated House bill numbers 515, 646, and 4222. The measure seeks to prevent the installation of cable wires and electrical posts in a particular area without the proper inspection and approval of a city or municipal engineer. “The specific location shall be inspected by the engineering officials prior to, during and after the installation,” the bill stated. Entangled lines, referred to as spaghetti wires, for various utilities are common across the country, especially in urban areas. The measure proposes to create an inter-agency committee composed of representatives from related government agencies and the local engineer “to set and implement the standard height, volume and capacity of electric and cable wires, and posts in every location and distance.” The bill also mandates public utility companies to submit a plan and design for the installation of cable wires and electrical posts in a particular location, which will be subject to the city or municipal engineer’s approval.  Companies will also be required to conduct quarterly monitoring and maintenance of their wires and facilities. — Kyle Aristophere T. Atienza

House committee OKs bill for stricter issuance of PWD IDs

THE HOUSE of Representatives committee on persons with disabilities (PWDs) on Monday approved in principle a bill mandating the stricter issuance of identification cards for disabled persons. House bill No. 7277 seeks to enforce a rigorous enforcement and stricter requirements on the issuance of PWD IDs by amending Republic Act 7277 or the Magna Carta for Disabled Persons. “Among the recommendations of different agencies on the proposed measure, including the issuance of one type of PWD Identification Card instead of categorizing it into apparent and non-apparent disability as recommended by the Department of Health,” Negros Occidental 5th District Rep. Ma. Lourdes T. Arroyo, the committee’s chairperson said in a statement on Monday. Ms. Arroyo said there is an urgent need to upgrade and standardize the system in the issuance of PWD IDs in light of reports of abuse. “The lack of a standard and efficient system in acquiring PWD IDs enables those individuals who do not have a disability to take advantage of the benefits of the laws that are supposed to be granted only to legitimate persons with disabilities,” she said. — Kyle Aristophere T. Atienza

Regional Updates (11/23/20)

Agricultural damage from Typhoon Ulysses reaches P4.18 billion

CROP damage from rain and flooding during the onslaught of Typhoon Ulysses (international name: Vamco) is now at P4.18 billion, higher than the previous estimate of P4.03 billion, the Department of Agriculture (DA) said. In a bulletin on Monday afternoon, the DA said Ulysses has affected 106,619 farmers and 106,489 hectares of land. Around 174,383 metric tons (MT) of produce were lost. Regions that incurred losses include CAR (Cordillera Administrative Region), Ilocos, Cagayan Valley, Central Luzon, CALABARZON (Cavite, Laguna, Batangas, Rizal, and Quezon), Bicol, and Zamboanga Peninsula. “The increase in values is attributed to the updated reports from CAR, Ilocos Region, Cagayan Valley and Central Luzon,” the DA said. Rice accounted for 50% of the total agricultural damage, followed by high-value crops at 22%, fisheries at 17%, and other subsectors at 11%. Damage to rice amounted to P2.07 billion. Some 69,534 hectares of farmland were affected and 130,412 MT of production volume were lost. Losses to high-value crops reached P932.93 million with 12,870 hectares of land affected and 35,731 MT of volume loss. Corn damage was pegged at P402.18 million with 24,096 hectares of farmland damaged and 8,240 MT of produce lost. Other subsectors that reported damage include fisheries at P711.95 million, livestock at P52.16 million, and irrigation at P11.86 million. — Revin Mikhael D. Ochave 

Labor dep’t orders work stoppage on Skyway project for accident probe

CONSTRUCTION of the Skyway Extension project has been suspended while the Labor department conducts a probe on Saturday’s accident that killed one motorist and hurt four others. The work stoppage order was issued by the Department of Labor and Employment (DoLE) to EEI Corp. and its subcontractors. In a briefing on Monday, DoLE officials said the investigation will determine violations on occupational safety. In a separate briefing, Occupational Safety and Health Center Executive Director Noel C. Binag said the proponent and contractors involved in the Skyway Extension project “failed to identify hazards.” He said, “I believe they were not able to assess the situation on the ground that is why they were not able to anticipate the hazard.” The operator of the crane that toppled might also face charges for reckless imprudence, but DoLE said the project owner, contractors, and subcontractors will be held liable for other charges relating to occupational safety violations. The stoppage order covers the entire stretch of the project. Ramon S. Ang, president and chief operating officer of proponent San Miguel Corp., said on Sunday that the company and EEI Corp. will be implementing stricter safety measures as he assured support to the family of the fatality and those injured. — Gillian M. Cortez

Go on a ‘creative crawl’ in Baguio

TOURISM Secretary Bernadette Romulo-Puyat with National Artist for Film Kidlat Tahimik at the newly-refurbished Baguio Convention Center. — DENISON G. MANUEL VIA DOT

TOUR operators in Baguio are offering “creative crawl” packages that will take visitors to the mountain city’s arts and culture venues, including the BenCab Museum of National Artist for Visual Arts Benedicto Cabrera and Ili-Likha Artists Village of National Artist for Film Kidlat Tahimik. “Baguio is more than just its natural wonders, and we want more Filipinos to rediscover what UNESCO designated as a Creative City for Crafts and Folk Arts,” said Tourism Secretary Bernadette Romulo-Puyat, who visited the city last week for the ongoing Ibagiw 2020, a month-long festival highlighting the city’s culture and history. “Initiatives like Ibagiw will certainly help revive tourism in the region and jumpstart the local economy… Experiencing the Ibagiw 2020 festival ensures the bright future of Baguio’s creative economy while keeping its traditions and art forms alive,” she said in a statement on Monday. For the creative crawl, stops also include the following: Mirador Hill, a nine-hectare Jesuit property that provides views of Baguio and Benguet’s landscape; the Mandeko Kito Artisanal Market, an arts and crafts fair organized by the University of the Philippines Baguio featuring local talent in the Cordillera Region; the Museo Kordilyera; Pilak Silver Craft; and Tam-awan Village, among others. “The pandemic has brought on challenges for everyone, especially those working in the tourism industry. Creative crawls bring guests to places they may not have visited before, thus supporting more locals. This means no one gets left behind as we rebuild tourism,” Ms. Puyat said. For more information on the Ibagiw 2020, which will be on until Nov. 30, visit https://ibagiw.baguioartsandcrafts.org/.

For a list of accredited tour operators, Baguio City’s requirements for tourists, and other information, visit:  app.philippines.travel, https://hdf.baguio.gov.ph/, and http://visita.baguio.gov.ph/.

DPWH, PPP Center start gauging investor interest in road projects

THE Department of Public Works and Highways (DPWH) and the Public-Private Partnership Center (PPP Center) said Monday that they are gauging investor interest in three proposed big-ticket expressway projects — the Pacific Eastern Seaboard Expressway, the Metro Cebu Expressway, and the Davao-Digos Expressway.

In a statement, the DPWH said it partnered with the PPP Center to sound out the market virtually with contractors, financing institutions, and potential investors.

The department said the exercise will help the government “ascertain the level of interest of the private sector” in undertaking the three projects.

“We want to gather initial feedback from potential project sponsors, contractors/operators and financiers especially during this pandemic situation who are willing to help the government in making these high-impact projects a reality. These roads are vital in facilitating economic improvement not just in Luzon, but also in Visayas, and Mindanao,” Public Works Secretary Mark A. Villar said in the statement.

The Pacific Eastern Seaboard Expressway project, according to the PPP Center website, involves the construction of a 226.5-kilometer expressway, which will start from Atimonan, Quezon, “traversing and linking the Mauban Section and the Real Section of the Mauban-Tignoan Road, Famy-Real-Infanta Dinahican Port Road, Infanta, Quezon,” terminating in Dingalan, Aurora.

The 73.75-kilometer Metro Cebu Expressway project, according to the DPWH website, “will serve as another north-south backbone highway providing seamless traffic flow from Naga City (Cebu) up to Danao City,” traversing Cebu island’s central mountains.

The 60-kilometer Davao-Digos Expressway, the DPWH said, “will start at the Bukidnon-Davao National Highway in Davao City and will terminate at Digos-Sultan Kudarat Road.”

“The project will traverse the towns of Toril and Santa Cruz and will serve as an alternative route for the Davao-Cotabato National Highway,” it added. — Arjay L. Balinbin

HMO profits surge in first half to P4.53 billion

HEALTH MAINTENANCE organizations (HMOs) posted net profit growth of 203% in the first half to P4.53 billion due to cost-management measures as well as increased demand during the pandemic, the Insurance Commission (IC) said Monday.

“This may be explained by the 6.4% decrease in the industry’s total expenses against its increasing revenues,” Insurance Commissioner Dennis B. Funa said.

The industry total was compiled from the financial statements submitted by 22 HMOs, which seek to manage healthcare costs by referring clients to selected providers at agreed rates.

The industry reported revenue of P25.64 billion, up 6.7%.

The IC said more Filipinos signed up with HMOs as the coronavirus disease 2019 (COVID-19) outbreak amplified the need for health protection.

The insurance regulator said 10 companies reported profit declines of between 8.44% and 249.33%.

According to the IC, 84% of claims for medical benefits worth P231.36 million were paid out by HMOs during the public health emergency. It was citing a survey conducted between April 16 and May 8, which includes the weeks when the strictest lockdown rules were in force.

“The trends that we have seen from the unaudited reports submitted by the HMOs reveal that Filipinos are increasingly recognizing the value of availing of HMO products as part of health protection,” Mr. Funa said.

The industry’s assets grew 51.7% to P52.09 billion. Liabilities increased 50.2% to P40.85 billion.

“This is due to unearned membership fees, which constitute 60.74% of such liabilities. It can be presumed that this is due to the difficulties encountered by the HMO industry in collecting membership fees because of certain restrictions imposed by the national government in response to the COVID-19 pandemic,” Mr. Funa said. — Kathryn Kristina T. Jose

DTI trading arm’s funds accounted for as Senate probe looms

TRADE SECRETARY Ramon M. Lopez said his department’s trading arm has accounted for all funds allocated to it, ahead of a possible Senate investigation into its finances.

Senate Minority Leader Franklin M. Drilon said that he wants to investigate Philippine International Trading Corp. (PITC), where he said around P18 billion in taxpayer money is “parked.”

Mr. Lopez said in a briefing Monday that the agency, which is attached to the Department of Trade and Industry (DTI), observes strict procurement procedures and places its funding in escrow until the terms of its transactions are finalized. Budgets from failed auctions return to the Treasury, he added.

“In effect, wala talagang natitira na pera sa PITC dahil po all are accounted for,” he said. “Wala pong kontrobersya dito dahil tagabili lang ang PITC at nagma-manage ng bidding process (No money remains with the PITC and everything is accounted for. There is no controversy because the PITC is just the purchasing agent and manages the bidding process).”

He said some processes are delayed to the following year due to delays in evaluating technical specification evaluations, which he said happens at other agencies as well.

PITC has been assigned to import coronavirus disease 2019 (COVID-19) vaccines. The agency charges a commission of between 1% and 5% from procuring government agencies.

During budget hearings of the Armed Forces of the Philippines, senators found that the PITC owed the military at least P9.6 billion.

Mr. Drilon also referred to Commission on Audit reports saying that PITC owed P9.176 billion in balances of fund transfers from government agencies from 2009-2019 that have remained unutilized.

Mr. Lopez said that PITC should explain its funding status. As of 2019, unused funds were returned to the Treasury, while ongoing procurement will continue to be processed, he said.

Money that is not returned to the Treasury translates to PITC income, he said.

“Kalahati nito dini-dividend din sa government, at kalahati ay pangtustos sa operations ng PITC dahil ang PITC, walang natatanggap na budget from government. Self-sustaining siya. (Half of the income is returned to the government as dividends, and the rest sustain PITC operations. PITC receives no budget allocations as it is self-sustaining).” — Jenina P. Ibañez

ERC third-quarter approvals pick up as lockdown eases

THE Energy Regulatory Commission (ERC) said Monday that it issued 113 certificates of compliance (CoCs) to power projects rated at 4,213 megawatts (MW) in the three months to September.

The certificates were issued to generation companies (GenCos), qualified end-users and entities with self-generation facilities and represent a pickup in the pace of approvals from the second quarter, when the agency, hampered by quarantine restrictions, approved only 21 CoCs.

“More than ever, we need to ensure that there will be sufficient power to keep the hospitals running round the clock, and that the students and workers who are studying and working online will get continuous electricity,” ERC Chairperson and CEO Agnes VST Devanadera said in a statement.

In the year to date, the ERC approved 37,817 CoCs, indicating that the third-quarter pickup in approvals remains well behind the pace recorded before the pandemic.

The ERC added in its Third-Quarter Monitoring report that no GenCos breached the market share limitations within each grid as well as the national grid.

“Nonetheless, the ERC also found some GenCos that failed to file or renew their respective CoCs within the prescribed period and were issued a Show Cause Order,” it wrote.

Under the Electric Power Industry Reform Act, a new generation company is only allowed to operate after securing a CoC from the ERC, as well as health, safety and environmental clearances from various government agencies. — Angelica Y. Yang

Return to pre-pandemic debt could pose growth risk

DETERIORATING public finances across Asia will be difficult to reverse, with any attempts to return to pre-pandemic debt ratios posing a risk to growth, ANZ Research said.

“Governments can afford to maintain expansionary fiscal policies and some are doing so,” ANZ Research analysts said in a note.

“We further estimate that restoring public debt ratios to pre-pandemic levels is an exceptionally tall order. It will require governments to run primary surpluses on a scale that will severely hurt growth,” according to Sanjay Mathur, ANZ research chief economist for Southeast Asia and India, and economist Krystal Tan.

The Philippines’ fiscal position will likely continue to weaken in 2021, though its larger budget deficits and debt levels are unlikely to harm macroeconomic stability, they said.

“Based on this fiscal stance, the public debt ratios (in Asia are) likely to continue to rise in 2021. In Malaysia, the debt ratio will remain above 60% of GDP (gross domestic product) and in the Philippines, it will exceed its 50% threshold,” Mr. Mathur and Ms. Tan said.

The government expects the Philippine debt-to-GDP ratio to hit 53.9% and 58.3% this year and in 2021. These are still below the threshold of 70% deemed safe by the International Monetary Fund but are much higher than the record low of 39.6% in 2019.

The budget deficit is expected to grow to P1.815 trillion this year, equivalent to 9.6% of GDP, before receding to P1.749 trillion or 8.5% of GDP next year. The budget deficit in 2019 was P660.2 billion or 3.4% of GDP. — Luz Wendy T. Noble

Commercial launch of ‘Golden Rice’ expected by 2023

THE COMMERCIAL propagation of Golden Rice is projected to begin by 2023, according to the Philippine Rice Research Institute (PhilRice).

PhilRice Senior Rice Research Specialist Reynante L. Ordonio said the institute’s timetable for Golden Rice still hinges on the length of the application process for the genetically modified variety, which still has to hurdle other clearances.

“There are still other processes that need to take place such as varietal registration. Our (is) that commercial propagation will happen by 2023,” Mr. Ordonio said during the virtual opening ceremony for the 16th National Biotechnology Week Monday.

Golden Rice has been modified to contain beta-carotene, a source of Vitamin A, and can be grown like inbred rice. It is designed to address Vitamin A deficiency in children by providing 30% to 50% of the nutrient requirement.

PhilRice recently announced the opening of the 60-day period for public comment, a prerequisite in the process of determining the variety’s biosafety.

Mr. Ordonio said the list of provinces that will be tapped for the pilot deployment of Golden Rice has yet to be finalized.

He said Quirino, Catanduanes, and Samar are viewed as candidates for hosting pilot programs.

“The list is not yet final. A lot can still happen before its commercial propagation is reached,” Mr. Ordonio said.

According to PhilRice, Vitamin A deficiency is a public health issue that affects around 17% of Filipino children aged five and below.

In December, Golden Rice received approval from the Bureau of Plant Industry for direct use as food and feed or for processing. — Revin Mikhael D. Ochave

Donations and losses during calamities

In recent weeks, the Philippines, mainly Luzon, was ravaged by a series of typhoons that left the Bicol Region in ruins and submerged the Cagayan Valley in floods. Homes and livelihoods were lost because of these calamities.

The sincere outpouring of disaster-relief donations from various sectors of the community has continued even in the midst of the COVID-19 pandemic.

However, kind-hearted donors should be mindful of the tax consequences of such donations and the penalties for failing to course the donation through authorized channels.

DONATIONS
Donations are generally subject to donor’s tax at the rate of 6% on the total gifts made in excess of P250,000 during the calendar year.

For donations to be exempt from donor’s tax, there are authorized channels provided by our Tax Code and Special Laws. Donations, whether from domestic or foreign entities, or a non-resident non-citizen of the Philippines, can be exempt from donor’s tax if made to 1.) national government, or any of its agencies when not conducted for profit or to any political subdivision of the Government, and 2.) any educational, charitable, religious, cultural or social welfare corporation, institution, foundation, trust or philanthropic organization or research institution or organization, subject to the condition that not more than 30% of the donation be used for administration purposes.

Further, the Tax Code provides the definition of a “non-profit educational and/or charitable corporation, institution, accredited non-government organization, trust or philanthropic organization and/or research institution or organization” as a school, college or university and/or charitable corporation, accredited non-government organization, trust or philanthropic organization and/or research institution or organization, incorporated as a non-stock entity, paying no dividends, governed by trustees who receive no compensation, and devoting all its income, whether students’ fees or gifts, donation, subsidies or other forms of philanthropy, to the accomplishment and promotion of the purposes enumerated in its Articles of Incorporation.

As for other channels such as the Philippine Red Cross, the Philippine Red Cross Act of 2009 (Republic Act No. 10072) expressly exempts such donations from donor’s tax, and they are deductible from the donors’ gross income for income tax purposes.

Also, donations to non-government organizations (NGOs) are exempt from donor’s tax provided such organizations are accredited with the Philippine Council for NGO Certification (PCNC).

Another case of donation is the assistance given by employers to their employees. Sad to say, this is not exempt from tax as any benefit received by an employee from his employer is generally considered compensation subject to tax. Only the benefits specifically provided under the laws and regulations issued by the Bureau of Internal Revenue (BIR) can be exempt. Assistance provided by employers to employees due to calamities is not exempt from taxation because they are not included in the exemption list. The BIR has been consistent in its rulings that any kind of assistance given by the employer to its employees due to calamities is not considered a tax-exempt benefit. The employer should either withhold tax from the rank-and-file employee or shoulder the fringe benefits tax in case of managerial/supervisory employees.

While many Filipinos are doing everything they can to provide assistance to the typhoon victims, business owners on the other hand are estimating their losses in terms of goods being washed out and factories submerged in flood waters or destroyed by strong winds.

LOSSES
For taxpayers engaged in business, the losses actually sustained during the taxable year and not compensated for by insurance or other forms of indemnity are allowed as deductions if such property is connected with the trade, business or profession, and if the loss arise from fires, storms, shipwreck, or other such events, or from robbery, theft or embezzlement.

For the losses to be deductible for income tax purposes, the following should be present:

• They must be related to trade, business, or profession;

• They must be actually sustained during the taxable year;

• They must not be compensated for by insurance or other forms of indemnity; and

• They must file their claim of loss within 45 days after the event.

In claiming the deduction for losses, the affected taxpayer must comply with the following requirements imposed under existing regulations, Revenue Regulations No. 12-77 as amended by RR 10-79 and Revenue Memorandum Order No. 31-09:

1. Declaration of loss should be filed within 45 days after the event with the Revenue District Officer (RDO) which has jurisdiction over the taxpayer’s place of business. The sworn declaration of loss must contain, among other things, the following information: Nature of the event that gave rise to the loss and time of its occurrence; Description and location of the damaged properties; Items needed to compute the losses such as: (a) cost or other basis of the properties;  (b) depreciation, if any; (c) value of the properties before and after the event; and (d) cost of repair; and Amount of insurance or other compensation received or receivable.

2. The declaration of loss should be substantiated with evidence which the taxpayer should gather immediately after the occurrence of the casualty or event causing the loss. These include the following documents which should be kept by the taxpayer for BIR verification: photographs of the property taken before and after the monsoon rains showing the extent of the damage sustained; documentary evidence for determining the cost of valuation of the damaged properties such as purchase contracts and deeds, receipt bills for improvements, competent appraisals of the property before and after the casualty, cancelled checks, vouchers, receipts and other evidence of cost; insurance policies; and, if applicable, police reports, in case of robbery/theft during the typhoon and/or as a consequence of looting.

Now more than ever, as we all try to navigate this new reality, taxpayers, whether as donors or entities incurring losses, must be prepared and must take immediate action when calamities occur. Preparation of documentation is necessary to avoid unnecessary consequences or implications.

Once again, our country’s unity is being tested. There a lot of work and rebuilding to do — it will take a while before we can all stand on our feet. Various organizations have launched assistance programs, relief operations, fundraisers and medical missions. Any amount goes a long way, as long as the intent to help is there.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Ed Warren L. Balauag is a manager of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Quo Vadis

THE SOUTH CHINA SEA, as we know, is of tremendous economic and geostrategic importance: it is where a quarter of international trade goes through and where more than half of the world’s oil tankers and merchant ships pass every year. The South China Sea is part of an area that has long been known to be the “greatest concentration of marine life on the planet,” where the highest concentration of this biodiversity is in the Philippines.

Located in the Spratlys are the breeding grounds of fish and other marine life that give food and sustenance to the people of Southeast Asia over centuries. Traditional fishermen and their families have lived throughout these years relying on their fish catch from these waters.

Based on the 2016 Arbitral Award, we know that this rich biodiverse region was mercilessly destroyed by China through its illegal reclamation and artificial-island building in the Spratlys. Beginning in 2013, Chinese dredgers pulverized the coral reefs in the Spratlys and used these dead coral reefs and other sediments to create dry land. Given the wanton destruction of these fish homes in the Spratlys, scientists are now warning that this has accelerated one of the world’s worst fisheries collapse that may lead into mass starvation in the region.

John McManus, a world-renowned marine scientist, ominously warned: “What we’re looking at [in the South China Sea] is potentially one of the world’s worst fisheries collapses ever… We’re talking hundreds and hundreds of species that will collapse, and they could collapse relatively quickly, one after another.”

ACTIONS TO BE TAKEN
At this point, what can we do?

It seems obvious that we should protect and rebuild the remaining marine life in the South China Sea. The suggestion of Justice Antonio Carpio and other marine biologists to immediately declare the Spratlys as a “Marine Protected Area” is well-taken.

If countries bordering the South China Sea agree to declare the Spratlys a “Marine Protected Area,” this will give the marine life in that area some “breathing space” to heal. We therefore urge our countrymen, the Philippine Government and our ASEAN neighbors to help us in this endeavor. This also means that we should push back on any destructive reclamation and militarization activities in the Spratlys. If these are not done, Southeast Asia will suffer one of the worst environmental catastrophes in history that will permanently deprive us of our food and livelihood.

Equally important is to demand accountability from the main perpetrator of the environmental destruction in the South China Sea — China. As cited in the Arbitral Award: “The overall damage to the coral reefs within the Greater Spratly Islands covers at least 124 km2, of which the [People’s Republic of China] is responsible for 99%.”

If we do not demand accountability, we embolden rogue countries like China to commit the same malevolent acts in the future, including China’s planned reclamation of Scarborough Shoal — another rich traditional fishing ground of Filipinos, the Vietnamese, and even the Chinese. It is imperative that we exert all efforts to prevent China from committing another disastrous crime by reclaiming Scarborough Shoal.

DUTY OF EVERY CITIZEN TO PROTECT THE SOUTH CHINA SEA
The protection of our environment is a duty not only of governments, but every citizen of this planet. Due to the interconnection of natural ecosystems, an environmental disaster in one area inevitably spills over to other parts of the globe. This is especially true in the rich biodiverse region of the South China Sea.

Even the Philippine Constitution provides that every Filipino, as part of the Philippine State, shall protect the nation’s marine wealth.

ICC FILING ON CHINA’S CRIMES AGAINST HUMANITY
For our part, on March 13, 2019, former Ombudswoman Conchita Carpio Morales and I — with Justice Antonio Carpio as our counsel — submitted a Communication to the Office of the Prosecutor of the International Criminal Court (ICC) to show that Chinese President Xi Jinping, Foreign Minister Wang Yi, and former Chinese Ambassador Zhao Jinhua, among others, committed Crimes Against Humanity by, among others, 1.) illegally blockading the traditional fishing grounds like the waters around Scarborough Shoal and the Spratlys, and, 2.) causing the near permanent destruction of the marine environment of the South China Sea.

ICC CASE AS PRIVATE SECTOR INITIATIVE
We consider this private sector initiative as our contribution to what should be a global effort to protect the South China Sea and to demand accountability from China.

We are delighted to know that there are now non-governmental organizations and individuals who have made the protection of the South China Sea as their advocacy. We are also heartened to know that, as of now, more than 98,000 individuals have signed an online statement of support for our ICC Case.

INTEGRATED APPROACH TO THE SOUTH CHINA SEA ISSUE
We should continue to explore ways that complement our efforts to protect the South China Sea and demand accountability from China.

The countries bordering the South China Sea are victims of China’s wanton environmental destruction in the Spratlys. Governments and citizens of these countries can file cases before their own courts especially against Chinese state-owned enterprises such as China Communications Construction Company which operate in their respective territories and which are linked to the illegal reclamation and island-building in the Spratlys.

For the Philippines alone, the University of the Philippines Marine Science Institute conservatively estimated that we are losing at least $662 million annually from our damaged reef ecosystems due to China’s reclamation activities and illegal fishing operations. This sums up to $4.634 billion since the start of 2014 (around the time China started dredging) until this year. This money can be used to save our fish and rehabilitate the marine ecosystem destroyed by China in our waters.

The countries bordering the South China Sea have the right to seize assets and properties owned by Chinese State in their territory as compensation for the crimes committed by the Chinese State against their people.

RIGHT MAKES MIGHT
We should not allow China to commit the perfect crime: to let China be simply because it is a superpower. To allow a superpower to commit abuses is to magnify such abuses because the superpower realizes that, with its resources and influence, it has no constraints in the world.

If we do not speak out against these abuses, then not only is China to blame but also ourselves. By speaking out against abuses, we show the world that we are enlightened humans who remain guided by morals and reason and not by the law of the jungle.

 

Ambassador Albert F.  Del Rosario is the Chair of the ADR Stratbase Institute.

Country’s vaccination program politicized

On April 15, 2018 Senator Richard Gordon, chairman of the Senate Blue Ribbon Committee, released his report recommending charges of graft and violation of the government ethics code against former President Benigno Aquino, former Health Secretary Janette Garin, former Budget Secretary Florencio Abad, and seven other former health officials for allegedly conspiring to approve the government purchase of the anti-dengue vaccine Dengvaxia.

“The confederacy to procure and inject en masse was not merely ill-advised, or unwise. It was criminal. The greatest sin and transgression of Aquino was to put the lives of Filipino children in grave peril. He simply did not care. He was insensitive and did not have compassion,” the report said.

Other signatories of the report were Senators Ralph Recto, Manny Pacquiao, Win Gatchalian, Tito Sotto, Gregorio Honasan, Juan Miguel Zubiri, JV Ejercito, Nancy Binay, and Grace Poe.

Mr. Aquino repeatedly explained during his appearance before the Blue Ribbon Committee that he approved the purchase of the vaccine in response to the dengue outbreaks that had resulted in numerous deaths. He rejected insinuations of corruption in the purchase of Dengvaxia.

The risk of dengue illness is present throughout the Philippines, with transmission occurring year-round. Transmission peaks during the rainy season — from May to November. Dengue infection is characterized by flu-like symptoms which include a sudden high fever. Complications can lead to circulatory system failure and shock, and can be fatal.  Severe dengue fever has been a major cause of severe illness and death in children. There is no antiviral treatment available.

The development of a safe and efficacious dengue vaccine capable of preventing clinically significant disease eluded vaccine developers for almost 70 years. The only licensed dengue vaccine is Sanofi Pasteur’s Dengvaxia, which has been registered in 20 dengue endemic countries, including the United States and European Union (EU) nations. Sanofi Pasteur had high hopes for Dengvaxia, the development of which had taken 20 years and cost around $1.8 billion. Officials predicted that the vaccine would bring down infection rates by 24% within five years.

In December 2015, President Benigno Aquino met with Sanofi Pasteur executives in Paris. Because dengue is epidemic in the Philippines, he approved the commercial sale of Dengvaxia in the country. The government spent $67 million on Dengvaxia and got underway a mass immunization program with the aim of vaccinating a million students by the end of 2016. About 700,000 individuals were inoculated at least one dose of the vaccine.

In November 2017, Sanofi Pasteur disclosed that Dengvaxia posed risk to individuals, mostly schoolchildren, who have not had a previous dengue infection. This prompted the Department of Health to suspend the vaccination program in schools, giving rise to a political controversy over whether the program was run with sufficient care and who should be held responsible for the alleged harm to the vaccinated children.

But in September 2019, the Philippine Medical Association urged the government to allow the use of Dengvaxia on willing patients and on those who have been exposed to dengue, as cases soared to more than 208,000. Since the World Health Organization recognized the use of the vaccine as a preventive measure, the organization of physicians recommended that Dengvaxia be given to “individuals who are interested, willing, and aware of the benefits and possible risks of the vaccine.

“Clinical trials and studies have shown that the dengue vaccine will help individuals who had previous dengue infection from getting severe disease,” the group said.

For 10 months now we have been faced with a more massive source of serious infectious disease. The coronavirus SARS-Cov-2 which causes COVID-19 has infected 418,818 individuals and caused 8,123 deaths as of this writing (last Sunday).

On Oct. 15, President Rodrigo Duterte announced that the government has secured the source of funds for the acquisition of vaccines for the COVID-19 mass vaccination. “I have the money already for the vaccine but I will look for more because you know there are now 113 million Filipinos. To me, ideally, all should have the vaccine without exception,” the President said in a televised address.

The President had previously indicated that the vaccine would likely be sourced from China and Russia, having expressed his trust on the vaccines being developed by those countries.

The announcement that several pharmaceutical companies, including the American giant Pfizer, have developed safe and efficacious vaccines against COVID-19 thrilled leaders of nations. Last Thursday, the President announced that the Philippines will enter into advance market commitments (AMCs) with private manufacturers of anti-COVID-19 vaccines after approving the conduct of negotiations and the signing of AMCs, including authorizing advanced payments for negotiated terms.

Presidential Spokesperson Harry Roque explained that the process for AMCs would include the signing of a Confidentiality Data Agreement, negotiation and signing of AMCs, registration with the Food and Drug Administration (FDA) through Emergency Use Authority (EUAs), advance payment based on negotiated terms, and mobilization and delivery.

National Task Force against COVID-19 Chief Implementer Carlito Galvez explained the various modes of vaccine financing that include direct procurement, multilateral loans, bilateral loans, and private sector financing through tripartite agreement with the government, the pharmaceutical company, and the private sector company.

On the issuance of EUAs, Task Force head Galvez said that EUAs can shorten the process of getting an approval with the FDA from six months to only 21 days. He assured that although the EUAs will skip some processes in vaccine approval, the Philippines’ vaccine expert panel and ethics review board, as well as the FDA, will be conscientious in their evaluation of the vaccines. He said that through collaborative regulatory evaluation with other countries, the Philippines can be assured that once the vaccine has been approved by FDAs with stringent commissions, its safety is most likely assured.

According to the procurement law’s implementation rules and regulations, advance payments should only be made after the President has approved them and cannot reach 15% of the contract value, unless otherwise ordered by the President. In addition to acquiring vaccines supplied by private companies, advance payments are still expected to procure vaccinations from the COVAX Global Alliance for Vaccination and Immunization, which is intended to guarantee adequate doses for 20% of the population of the participating countries.

However, not everyone is thrilled about China’s fast development of a vaccine as it has had scandals over substandard vaccines in the past. While the vaccines developed by Pfizer and Moderna looked very promising, experts say it may be too soon to discount the possibility of adverse long-term effects. There are many other questions about them like the length of the immunity they render and their efficacy among the young and elderly that remain unanswered.

The silence of Senators Sotto, Gordon, Recto, Pacquiao, Gatchalian, Zubiri, and Poe, who all found anomalous the purchase of Dengvaxia, on this planned advance payment for the massive purchase of anti-COVID vaccines is deafening. What matters to them is the political color of the powers that be, not the health of the people.

 

Oscar P. Lagman, Jr. is a retired corporate executive, business consultant, and management professor. He has been a politicized citizen since his college days in the late 1950s.

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