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Nationwide round-up (10/12/20)

Bill on faster permit processing to get urgent stamp

THE MEASURE granting President Rodrigo R. Duterte special powers to expedite permit processing amid the coronavirus pandemic will be certified as urgent, a Palace official said. This comes as Senate Majority Leader Juan Miguel F. Zubiri requested that the bill be certified to have it passed on final reading before Congress suspends session from Oct. 17-Nov. 15. “May request ako, ‘yung ating (I have a request, the) emergency powers for the Ease of Doing Business, baka pwedeng ma-certify (perhaps it could be certified),” Mr. Zubiri asked Executive Secretary Salvador C. Medialdea at a hearing. In response, Mr. Medialdea said the Office of the President (OP) will act on the request of the senator. Senator Christopher Lawrence T. Go, who chaired the finance subcommittee hearing, also confirmed the OP’s commitment. The lawmakers were referring to Senate Bill No. 1844, which is currently pending second reading in the chamber. A notice certifying a bill as urgent will allow Congress to pass the measure on second and third reading on the same day, doing away with the three-day interval. In its last version, the bill provides Mr. Duterte the authority to speed up and streamline the process for new permit applications as well as suspend or waive requirements. This was filed after Mr. Duterte consulted Congress for possible amendments to further reduce red tape. Mr. Medialdea was attending the hearing on the P8.239 billion OP budget for 2021, which is slightly higher than the P8.201 billion allocation this year. — Charmaine A. Tadalan

Activist mother seeks furlough for baby’s funeral

DETAINED ACTIVIST Reina Mae Nasino asked a Manila regional trial court to allow her to attend her three-month old child’s wake and burial. Ms. Nasino on Monday filed the motion through her legal counsel from the National Union of Peoples’ Lawyers (NUPL). Her daughter died of pneumonia on October 9, the same day she filed a motion for furlough to see the child at the hospital. That motion has yet to be acted upon by the court. “She implores, nay, pleads and begs, this Honorable Court to immediately give her the decent and humane chance to be with her baby daughter, whom she was not able to comfort and hold while in sickbed up to her dying hours, for the last time, and to properly grieve over her tragic and untimely passing,” she said in her latest motion. The NUPL also sent a letter to Chief Justice Diosdado M. Peralta appealing for possible intervention. “We are compelled solely by the circumstances to humbly bring this matter to your Honor’s attention for your information and for any appropriate action as you deem necessary and warranted,” the letter read. Ms. Nasino was among the more than 20 political prisoners who asked the Supreme Court in April to allow their release from jail on humanitarian grounds due to the coronavirus threat. The high court in July referred the case to the respective trial courts where the petitioners’ cases were pending, treating the lawsuit as an application for bail or recognizance. Ms. Nasino, charged with illegal possession of firearms and explosives and currently detained at the Manila City Jail Female Dormitory, was pregnant when she was arrested on November 5, 2019. — Vann Marlo M. Villegas

Parts of Metro Manila flooded due to heavy rains from storm, monsoon

TROPICAL STORM Nika, with international name Nangka, was already out of the Philippine area as of Monday afternoon but it still brought heavy rains, combined with the southwest monsoon, to parts of Luzon, including Metro Manila. Parts of the nation’s capital were flooded, with some roads rendered impassable to all types of vehicles, according to the Metro Manila Development Authority. Weather bureau PAGASA said other affected parts of the country were the regions of Ilocos, Cordillera, Cagayan Valley, Central Luzon, and Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon), and the provinces of Camariñes, Mindoro, and Palawan, including Kalayaan, Calamian, and Cuyo Islands.

ANOTHER LPA
Meanwhile, a low pressure area (LPA) east of Mindanao is “likely to develop into a tropical depression within 48 hours,” according to PAGASA’s Monday afternoon advisory. As of 4 p.m., it was about 540 kilometers east of Surigao City in Surigao del Sur and moving northwest towards Eastern Visayas and the Bicol region. It will be named Ofel once it develops into a tropical depression.

Impassable

MMDA

The E. Rodriguez-G.Araneta intersection in Quezon City was flooded waist-deep  on Monday. The Metro Manila Development Authority issued a warning that it was impassable to all types of vehicles as of 5:16 p.m.

Regional Updates (10/12/20)

P154M released to Calabarzon hog raisers affected by ASF

INDEMNIFICATION for hog raisers affected by the onslaught of the African swine fever (ASF) in Calabarzon — composed of the provinces of Cavite, Laguna, Batangas, Rizal, and Quezon — has reached P153.96 million, according to the Agriculture department. In a statement on Monday, the Department of Agriculture (DA) Region IV-A office said as of October 7, around 49,393 pigs owned by 6,644 growers had been culled and paid by the government as part of the livelihood intervention and support program. The regional office also distributed broiler chickens and mushroom production packages to affected farmers in the towns of Catanauan, Candelaria, and Sariaya in Quezon under its Recovery and Rehabilitation program for ASF-affected farmers. “The goal of this program is to provide an alternative source of livelihood for ASF-affected pig growers as they recover from severe damage and losses caused by ASF,” the DA said. As of late September, the DA said the death toll from the virus has reached 316,637 pigs since its detection in August 2019. According to the World Organization for Animal Health, ASF is a hemorrhagic viral disease that affects domestic and wild pigs. It poses no health risk to humans. A vaccine against the disease has yet to be developed. — Revin Mikhael D. Ochave

Boracay tourism workers to get DoT fund for COVID-19 testing

BW FILEPHOTO

THE TOURISM department will provide P1.6 million to have Boracay workers undergo reverse transcription polymerase chain reaction (RT-PCR) testing as more local tourists are anticipated to go on holiday at the popular island destination. “By supporting RT-PCR testing among workers in Boracay, the Department reiterates that safety is the unparalleled priority in reopening domestic tourism. “We want to restore confidence amongst travelers and protect their health and well-being as our tourism workers get their livelihood back,” Tourism Secretary Bernadette Romulo-Puyat said in a statement on Monday. Boracay was reopened to local visitors on October 1. The Department of Tourism, together with the World Health Organization and the Department of Health, also provided a P1.8 million fund to Baguio City in support of antigen testing for visitors in the mountain city. Baguio and provinces in Region 1 launched the first domestic tourism bubble also on Oct. 1. Ms. Puyat said the Tourism Promotions Board is undertaking more project for the rest of the year to assist destinations in terms of readiness with health and safety protocols. “All of these efforts by the DoT, our attached agencies, together with our partners in the public and private sector, support the President’s directive to boost the country’s domestic tourism. We are hopeful that, by reviving tourism with health and safety measures in place, the tourism industry will make it through the pandemic and be a strong catalyst for economic growth in the new normal,” Ms. Puyat said.

Davao City reimposes 7 p.m.-5 a.m. curfew until Dec. 31

DAVAO CITY Mayor Sara Duterte-Carpio has ordered a return of curfew hours, from 7 p.m. to 5 a.m., until the end of the year following a recent spike in locally-transmitted coronavirus cases and in anticipation of a potential surge due to “after-work non-essential activities” with the coming Christmas holidays. In Executive Order (EO) No. 55, issued Monday and takes effect on Oct. 15, the mayor also cited that “there is a need to control the COVID-19 (coronavirus disease 2019) cases in Davao City because of the full occupancy of the COVID-19 beds in the Southern Philippines Medical Center,” a government-owned facility that serves as the only COVID referral hospital in the city. Curfew exemptions cover only  medical frontliners, government workers on official duty, family members attending a wake, and those on an emergency situation. During the curfew period, drinking in public spaces as well as the disruptive use of private sing-along equipment are also banned. As of Oct. 10, the city had 499 active cases out of the total 2,363.

Labor dep’t to consult employers, workers on delayed 13th month pay

THE Department of Labor and Employment (DoLE) will be meeting with the employers and workers’ groups to discuss the possibility of deferring the 13th month pay this year as the coronavirus disease 2019 (COVID-19) crisis continues to affect businesses.

In a briefing Monday, Labor Undersecretary Benjo Santos M. Benavidez said due to the “extraordinary times” there may be a need to consult both sides before deciding on a mutually-beneficial course of action.

“This is a delicate balancing act for the Department of Labor and Employment: timbangin ang interes ng manggagawa, timbangin ang interes ng employer (weigh the interest of workers and employers),” he said.

DoLE will be meeting with the sectoral representatives today to discuss the possibility of deferment and the extension of the period allowed to classify workers as temporarily displaced. Labor Secretary Silvestre H. Bello III said last week he will release a department order soon on extending the maximum period of six months by three more months.

Payment of a 13th month pay is required under Presidential Decree No. 851.

Mr. Benavidez said there is no provision in the decree that allows employers to defer their payments. He added that a deferment will require a law to exempt distressed businesses that are not capable of paying their employees.

However, he added the implementing rules and regulations for the decree indicate that distressed employers can be exempted from making the payment altogether if they apply for an authorization from DoLE, which will examine whether they are qualified.

Section 3(a) of the implementing rules and regulations for Presidential Decree 851 exempts the following from making payments: “Distressed employers, such as (1) those which are currently incurring substantial losses or (2) in the case of non-profit institutions and organizations, where their income, whether from donations, contributions, grants and other earnings from any source, has consistently declined by more than forty (40%) percent of their normal income for the last two (2) years.”

Mr. Benavidez said in the last few years, no company has applied to DoLE for an exemption. — Gillian M. Cortez

DoTr signs deals with LANDBANK for road transport, rail projects

THE Department of Transportation (DoTr) said it signed six agreements Monday with the Land Bank of the Philippines (LANDBANK) to support various projects, including the distribution of cash subsidies to transport workers, financing to acquire modern jeepneys and buses, and testing the automatic fare collection system.

In a virtual signing, Transportation Undersecretary for Railways Timothy John R. Batan said the department will avail of LANDBANK’s appraisal services to acquire about 10 million square meters of land for use by the Philippine National Railways (PNR).

The second agreement, according to Mr. Batan, is to distribute cash benefits to individuals, communities, or businesses affected by the North–South Commuter Railway project.

“We need to ensure that they are compensated in a timely and orderly manner. That’s why the DoTr and the PNR are entering into a memorandum of agreement (MoA) with LANDBANK to facilitate the distribution of cash entitlements,” he said.

Three agreements were signed between the department and the state-run bank for the distribution of cash subsidies for public utility vehicle operators and their fuel needs, as well as to test the automatic fare collection system.

The DoTr and LANDBANK will lead the testing of the fare collection system, which will accept MasterCard EMV-compliant bank cards for jeepney and bus fares.

LANDBANK said it will start pilot-testing the cashless system in February and also serve as an issuer of the EMV-compliant cards.

The cards will be tested on 130 modernized jeepneys and buses with routes in Metro Manila, nearby provinces and Metro Cebu.

“Itong card na ito pwedeng gamitin sa supermarkets retail stores at online payments. Interoperable po ito dahil pwedeng gamitin sa ATMs para mag-withdraw, pwede rin for bill payment at fund transfer sa accounts ng ibang tao (This card can be used for retail purchases and online payments, as an ATM card, for bill payments and fund transfers to other people),” LANDBANK Vice-President and Head of Card and Electronic Banking Randy Montesa said.

They also signed an agreement for LANDBANK to finance the acquisition of modernized jeepneys, with total funding of P3 billion.

The agreement also provides P3 billion for the acquisition by eligible cooperatives of modern buses in Metro Manila, according to Emmellie V. Tamayo, first vice-president and head of lending program management for LANDBANK. — Arjay L. Balinbin

NGO warns against excessive fish imports to support aquaculture

THE aquaculture sector must be tapped to fill the fish supply gap in the event projections of tightening supply by the end of the year are borne out, while avoiding excessive imports, an agriculture advocacy group said.

Tugon Kabuhayan also said another factor pressuring the fish supply is the three-month closed season for round scad, or galunggong, beginning on Nov. 1, though it added that such measures are ultimately beneficial.

In a virtual briefing Monday, the group’s convenor Asis G. Perez said the closed season declared by the Bureau of Fisheries and Aquatic Resources (BFAR) will allow the round scad to spawn.

“Aquaculture can help address consumer demand and will cover the supply of the fish during the implementation of the closed season. The closed season will also help revitalize galunggong supply,” Mr. Perez said.

“Also, a lot of evidence has shown that with closed fishing seasons, you actually increase production. Without closed fishing seasons, maybe we will not have enough fish,” he added.

Mr. Perez, a former BFAR national director, said the aquaculture subsector accounted for 2.3 million metric tons (MT) or 53% of total fish production of 4.36 million MT in 2018.

“Based on the recent price monitoring of the Department of Agriculture (DA), the retail price of galunggong in selected Metro Manila markets ranges from P170 to P240. On the other hand, tilapia ranges from P90 to P140 pesos. Regardless of the price, protein from tilapia is no different from other fish,” Mr. Perez said.

The DA projected a deficit of 42 days’ supply for the fishery sector by the end of the year.

Supply of round scad is estimated at 53,925 MT, much less than projected demand of 105,690 MT, resulting in a deficit of 51,675 MT.

On the other hand, tilapia supply is estimated at 102,624 MT, with demand at 114,660 MT, producing a 12,036 deficit.

In response to the deficit, the DA is planning to import of 400,000 MT of these fish varieties, which would result in a surplus by the end of the year.

Mr. Perez said the DA’s planned imports must be calibrated in order not to affect fish producers.

“We will have a problem if imports are too high because it will dampen the market for the fisheries and aquaculture sector. That might result in a reduction in future production,” Mr. Perez said.

Meanwhile, Mr. Perez called for assistance from the government in promoting and urging consumers to buy domestic fish products.

“There is no difference between fish caught through wild-catch and those produced via aquaculture,” Mr. Perez said.

“Producers are very much willing to supply food to consumers, especially during the closed season and despite the onset of the pandemic. They just need support in improving the supply chain,” he added. — Revin Mikhael D. Ochave

More power consumers seen joining RCOA by 2021

THE Energy Regulatory Commission (ERC) said it is targeting more participation next year in a scheme allowing consumers to select a preferred electricity provider.

The commission is seeking to fully implement the retail competition and open access (RCOA) scheme in the next three years by introducing more contestable customers in batches.

It proposed in a draft resolution that consumers with 500 to 749 kilowatts (kW) of average monthly peak usage will be allowed to transfer to a different power provider starting Feb. 26, 2021, while those with 100 kW to 499 kW of consumption can also do the same starting Jan. 26, 2022 and electricity end-users with 10 kW to 99 kW starting Jan. 26, 2023.

At present, only power customers with 750kW to 1MW of usage get to choose their power providers on a “voluntary basis” since the ERC resumed licensing retail electricity suppliers this year.

The implementation of the RCOA scheme was blocked by the Supreme Court in 2017 because it was being enforced mandatorily for large electricity end-users.

“The benefits of the RCOA scheme will soon come to fruition despite the temporary setback that came up against its implementation,” ERC Chairperson Agnes VST Devanadera said in a statement.

Last month, the commission in an advisory told distribution utilities to immediately process within 20 days the requests of their customers opting to switch to another power provider.

There was a slight uptick in the number of customers in the contestable retail electricity market in the second quarter, though they contracted less electricity supply during the period due to the impact of the coronavirus pandemic, according to an ERC report in August.

The weighted average price on the market fell to P3.95 per kilowatt-hour (kWh) in June and P3.97/kWh in May from P4.12/kWh in April.

“The envisioned competition in the retail level of the supply sector will soon be a reality and the consuming public will be the beneficiaries of the RCOA as they can opt to choose the electricity provider that offers the most competitive price,” Ms. Devanadera said.

At the end of June, there were 2,089 registered customers with contestability certificates, 70% of which have entered into retail supply contracts, while the rest are still powered by their respective distribution utilities. — Adam J. Ang

DA questioned about overlapping rice programs

SENATOR Cynthia A. Villar said the Department of Agriculture’s (DA) rice programs could be suffering from redundancy due to the failure to adequately define the roles played by the National Rice Program and the Rice Competitiveness Enhancement Fund (RCEF).

The department was asked in a hearing Monday to provide the list of National Rice Program beneficiaries to check whether recipients of inbred and hybrid rice seed are receiving duplicated benefits.

“’Yung National Rice Program at RCEF nag o-overlap… dapat maliwanag kung ano ‘yung inimplement nila at ano ‘yung inimplement n’yo. The two programs overlap… it needs to be clear which program is implementing what measures),” Ms. Villar said at the hearing.

“Sabi ko piliin ‘yung mga bayan na gusto ng hybrid seed at ‘wag na bigyan ng inbred,” Ms. Villar said. (The DA should choose which towns prefer hybrid seeds and those who prefer inbred.)

“Ang mangyayari d’yan anong ginawa ng National Rice Program at anong ginawa ng RCEF? Bakit tayo nag o-overlap? P9 billion sa National Rice Program, P10-billion budget ng RCEF, di natin ma-distinguish…?” (What will happen there is that we’ll have to determine which measures were carried out by the National Rice Program and which were by RCEF? Why is there an overlap? We have a P9-billion budget for the National Rice Program and P10 billion for RCEF and yet we can’t make distinctions?)

Mr. Villar said the National Rice Program should only benefit towns that were not covered by the RCEF to reduce cost, noting that inbred rice seed costs P38 per kilogram while hybrid seed costs around P260 per kg.

She also noted that the DA is also conducting training already provided in the RCEF.

“Bakit ka nagti-training? P1 billion na nasa training… Duplication na naman ‘yan (Why are you training? We already have P1 billion for training, that’s another case of duplication),” she said.

The DA said it will submit to the committee a detailed report on the implementation of the rice programs to address possible overlaps.

At the same hearing, Ms. Villar said she will be filing a resolution that will allocate tariff collections in excess of the P10 billion required by law to fund RCEF as cash assistance to farmers.

“I am filing a resolution that anything beyond the P10 billion will be given as cash assistance to the farmers in this time of pandemic, anything beyond the P10-billion collection,” she said.

Senator Francis N. Pangilinan supported the proposal and asked to co-author the resolution.

Agriculture Secretary William D. Dar said the department is also seeking funding sources for cash assistance.

“Tinitingnan namin ang taripa at kung pwede magbigay ng cash assistance we will make it possible this time (We are looking at the tariffs and if we can give cash assistance, we will make it possible this time),” he said. — Charmaine A. Tadalan

Greater market concentration seen worsening inequality

THE concentration of control within a few companies of basic services and utilities may have worsened inequality by pushing up prices, making services less efficient, while fueling wealth accumulation in a limited number of people, an Ateneo de Manila economist said.

At the 3rd School of Social Sciences Research Conference Monday, economist Geoffrey M. Ducanes said the level of income inequality in the Philippines could be in the top 20 globally out of 140 countries, as measured by the adjusted Gini coefficient.

Market concentration, which increases the risk of abuses of market power, could have an adverse impact on inequality, Mr. Ducanes said, citing the preliminary results of an ongoing study: “Market Concentration and Household Inequality: Exploring the Link in the Case of the Philippines.”

“Inequality in the Philippines, though possibly declining in some dimensions, is still high relative to other countries. Market concentration and market power contribute to this high inequality,” he said.

Inequality also persists in terms of access to goods and services, as seen by the gaps in the quality of education and Internet access available to rich and poor.

He said market concentration manifests itself in high prices, inefficient delivery of goods and services, and excessive profits.

The first two channels affect the inequality in delivery of goods and services, as observed in the history of the capital’s access to water in the past when the government through Metropolitan Waterworks and Sewerage System (MWSS) had sole control over distribution. The situation improved between 1997 and 2020, after two private companies took over as the capital’s water providers, according to Mr. Ducanes.

“Compared to the period when MWSS was the  monopoly in Metro Manila water supply, there has been a big improvement in water access and quality in Metro Manila after the water deregulation and Maynilad Water (Services, Inc.) and Manila Water (Co.) took over as concessionaires. It is still very concentrated, but less so,” he said.

He said the gains in the access to water have also been more significant for those in the bottom income groups.

He also cited internet services, which are expensive but slow.

He said excessive profits resulting from dominant market positions benefit only a few firms and could be a source of income inequality, especially if low-income households do not get a share of the profits.

“It is only highly circumstantial, and we plan to dig deeper, but is it an accident that in the Forbes’ list of US dollar billionaires, more than half have serious involvement in industries that have been identified by studies… to be highly concentrated?,” he said.

Mr. Ducanes said policies that support market competition can help reduce inequality. — Beatrice M. Laforga

Farmer group estimates P36-B subsidy needed due to weak palay prices

SAMAHANG INDUSTRIYA ng Agrikultura (SINAG), a farmer organization, said the government needs to provide subsidies worth P36 billion to farmers currently receiving low farmgate prices for their palay, or unmilled rice.

In a letter Monday, SINAG Chairman Rosendo O. So asked President Rodrigo R. Duterte to direct the Department of Agriculture (DA) to provide P36 billion, which will subsidize palay by about P4 per kilogram.

Mr. So said that giving P36 billion in subsidies during the harvest will help both rice farmers and the milling industry by ensuring farms can pay for planting materials for the next crop.

“Our expected total harvest for this cropping period is 9 million metric tons (MT) of palay so this means 9 billion kilograms multiplied by P4 pesos is P36 billion,” Mr. So said in the letter.

“The low price of palay means that our famers will not be able to recoup their expenses during this cropping period, and may force them to stop planting palay for good,” he added.

According to SINAG, the farmgate price of palay is at about P11 per kilogram for wet or freshly harvested palay, and P14 to P15 for dry palay.

The Philippine Statistics Authority estimates that the average farmgate price of palay fell 1.5% week on week to P16.84 per kilogram in the third week of September.

Mr. So said that instead of addressing the low price of palay, Agriculture Secretary William D. Dar has claimed that palay prices are at P18 per kilogram in Central Luzon and P19 in Cagayan Valley, according to a Sept. 16-30 price report done by the Philippine Rice Information System.

“The rice milling industry is also on the verge of collapse. They cannot purchase the palay at P17 per kilogram given the deluge of imported rice that is flooding our market,” Mr. So said.

The government, through the National Food Authority, continues to buy palay at P19 per kilogram and has since been directed by Mr. Dar to increase procurement.

Meanwhile, SINAG also requested Mr. Duterte to bring 30% of the live hogs in the Visayas and Mindanao to Luzon in order to balance the pork supply.

“Luzon is overwhelmed with an oversupply of frozen and imported pork stocks,” Mr. So said.

“The decrease of hog production has led to the increase of the retail price of pork in the market at P300 per kilogram. African Swine Fever (ASF) is still a threat to the hog industry not only in Luzon but in Visayas and Mindanao,” he added.

Earlier this month, the DA projected a pork deficit of 231,030 MT or 45 days’ consumption by the end of the year.

ASF has resulted in the death or culling of 316,637 hogs since the outbreak started in August 2019.

The DA was asked to comment on SINAG’s letter to Mr. Duterte, but had not replied at deadline time. — Revin Mikhael D. Ochave

Broadening the retirement tax exemption

The COVID-19 pandemic caused not only a global health crisis, but also economic slowdown and disrupted business operations. The adverse economic impact resulted in companies, if not going out of business, employing cost-reduction measures by reducing headcount using various means.

One of the schemes employees may consider is early retirement, which allows them to at least receive valuable benefits rather than drawing the short end of the stick and being left unemployed.

I’m reminded of my mother, who teaches at a private junior high school. Being accustomed to traditional teaching methods, she considered retiring due to the technological challenge of alternative learning programs for this school year. She plans to invest the retirement benefits in a mini-store or laundry.

EXEMPTION FROM TAX OF RETIREMENT BENEFITS UNDER BAYANIHAN II
With the recent approval of R.A. 11494, otherwise known as the Bayanihan to Recover as One Act (Bayanihan II), the government signaled its intention to reduce the adverse impact of COVID-19 through the provision of assistance, subsidies and other forms of socioeconomic relief.

Under Section 5 of Bayanihan II is a provision on tax-exempt retirement benefits granted by private firms between June 5, 2020 and Dec. 31, 2020.

Nevertheless, the law provides that any re-employment of such an employee by the same firm within the succeeding 12–month period will be considered proof of non-retirement and will subject the benefits received to appropriate taxes. Further, in addition to the payment of appropriate taxes, any person who willfully evades or defeats any imposable tax under this section may be held criminally liable and penalized under Section 255 of RA 8424, as amended.

EXEMPT RETIREMENT BENEFITS UNDER THE TAX CODE
The exemption of retirement benefits is not new. Section 32 (B) (6) (a) of the Tax Code, as amended, provides that retirement benefits are exclusions from gross income and exempt from tax. Exempt retirement benefits are (1) benefits received under Republic Act No. 7641 (Labor Code) and (2) benefits received in accordance with a reasonable private benefit plan maintained by the employers.

R.A. No. 7641 provides that, in case of retirement, the employee is entitled to receive such benefits as he may have earned under existing laws, any collective bargaining agreement, and other agreements. Further, the law states that, in the absence of a retirement plan or agreement, an employee may retire and be entitled to retirement pay upon reaching the age of 60 years or more, but not beyond 65, after serving at least five years in the establishment.

For retirement benefits received under a reasonable private benefit plan, the tax exemption can be availed of if the retiring official or employee has been in the service of the same employer for at least 10 years and is not less than 50 years of age at the time of his retirement, and that the benefits granted may be availed of by an official or employee only once.

TAX-EXEMPT SEPARATION PAY
If the employee is let go by the business to cut costs and help the company better deal with the pandemic, the employee may be entitled to separation pay.

Separation pay is also exempt from income tax under Section 32 (B) (6) (a) and (b) of the Tax Code of 1997. It states that any amount received by an employee as a consequence of separation for any cause beyond the control of the employee is exempt from taxes regardless of age or length of service.

The phrase “for any cause beyond the control” of the employee connotes involuntariness. Separation from the service must not be asked for or initiated by him.

This law requires the presence of two conditions in order that the employee benefits may be granted a tax exemption: (1) the employee is separated from the service due to a cause beyond his control; and (2) the employer pays benefits as a consequence of such separation.

Hence, if the employee was separated due to retrenchment, the same is considered beyond the control of the employee. The separation benefit is exempt from income tax.

OBSERVATIONS ON SECTION 5 OF BAYANIHAN II
Since retirement pay and separation pay are already exempt from tax, one wonders what type of retirement pay is contemplated under Bayanihan II.

What new type of exemption is covered by the tax-exempt retirement benefit under Bayanihan II?

We can recall that retirement benefits and separation pay under the Tax Code must meet specific requirements and conditions before they can be considered tax exempt.

Interestingly, the provision under Bayanihan II is plain and general and does not specify whether such retirement benefits will be received under R.A. 7641 or under a reasonable private benefit plan. Also, the law made no mention of the required retirement age or years of service rendered by the employee.

Thus, we can presume that the general character of the provision granted employers and employees the liberty to categorize benefits that they may give to leaving employees as retirement payments in order for such to be exempt from taxation. The unrestrictive character of the provision may also lead taxpayers to assume that an  employee may retire at any given age or number of years of service.

The general nature of the exemption may cover situations where an employee applies for voluntary early retirement which do not meet the requirements under the Tax Code for exemption.

Also, considering the simple and plain language of Bayanihan II, one wonders if it is required that the employer has an existing early retirement package before an employee may avail of the tax exemption. For companies without an existing early retirement package, can the employer and employee just draw up an agreement and call it an early retirement package? Will this new agreement qualify for exemption? Is there a need to get a confirmation from the BIR that the retirement benefit is exempt under the Bayanihan II Law before an employer can treat the benefit as tax-exempt?

The BIR has recently issued various Revenue Regulations implementing the tax provisions of the Bayanihan II. However, we are still waiting for the revenue regulations on exempt retirement benefits. Hopefully, the rules will be issued soon to answer some questions of employees and employers so employees can start availing of the tax exemption.

SOCIOECONOMIC RELIEF
The broad-ranging nature of this provision in Bayanihan II manifests the intention of the framers of this piece of legislation to attain the government’s objective of providing socioeconomic relief and mitigate the economic cost and losses stemming from the COVID-19 pandemic.

With hope, may the bayanihan spirit resonate through the implementing agencies, including the BIR, in their issuances of rules and regulations implementing the provisions of the Bayanihan to Recover as One Act.

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.

 

Edrian B. San Juan is an associate of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

In the thick of October

A bit of historical trivia: Why is October, the 10th month of today’s 12-month calendar, named after the Greek word “octo” meaning “eight”?

Simple — October was the 8th month of the early Roman 10-month-calendar instituted, according to legend, in 738 BCE by Romulus, the founder and first ruler of Rome. October became the 10th month when the second Roman ruler, Numa Pompilius (715–673 BCE), added January and February to account for the winter gap, thereby creating the 12-month-calendar, which was then re-calibrated to become the Julian calendar beginning 46 BCE, and the Gregorian calendar from October 1582 AD to date.

An almost Christmassy month with a cooler temperature, October has its unique historical actualities — from the temporal to the spiritual — petering out on “All Hallows Eve” with the joyful sound and scent of Yuletide fast breaking through.

From a temporal perspective, the approach of October trumpets the revelry of the world’s largest folk festival — Oktoberfest. The German “beer extravaganza” is held over a two-week period, peaking and ending on the first Sunday in October.

WORLD’S LARGEST ‘VOLKSFEST’
As the story goes, Octoberfest originated in Munich, Germany on Oct. 12, 1810, in celebration of the marriage of Bavaria’s crown prince — later King Ludwig I — to Princess Therese von Sachsen-Hildburghausen. The festival lasted five days, ending with a horse-race in a 42-hectare area called Theresienwiese (“Therese’s green”) in honor of the Crown Princess, although the locals shortened the name to “Wiesn.”

The anniversary celebration is held regularly, growing more popular with the years. When the city began allowing beer on the fairgrounds, makeshift beer stands began cropping up, eventually replaced by beer halls/tents sponsored by local breweries that are also represented in parades featuring horse-drawn beer wagons/floats (the Paulaner, Hofbrau, Augustiner, Spatenbrau, Hacker-Pschorr brau, etc.), with people in folk costumes amidst carnival and crazy-rides.

A highly profitable attraction in Munich, it is said to earn over 450 million euros each year, drawing more than six million people annually. Beer consumption is claimed to “go upwards to 2 million gallons with large supplies of pork sausages, smoked fish, spit-roasted chickens, among others, for the two-week extravaganza.”

Adding to the festivities is Rosa Wiesn — the “Gay Oktoberfest” event. Its high-point, called Gay Sunday, is said to attract over 8,000 LGBTQ festival goers, the second biggest LGBTQ event after the June 28th Christopher Street Day, forerunner of Gay Pride Day.

Oktoberfest has spread worldwide, taking after the traditional German beer festival, keeping alive the Bavarian sense of cordiality. However, with COVID-19 on the rampage, this fabled folk festival may take a respite this year. And for Oktoberfest Philippines? Good luck 2021!

But beyond this worldly extravaganza, what is it about October that makes it remarkably spiritual to churchgoers in this Asian Christian nation?

RELIGIOUS IMPORT
Ecclesial references point to October as the month when the feast days of some of the more popular saints of the universal Church are celebrated: St. Therese the Little Flower (Oct. 1), St. Francis of Assisi (Oct. 4), St. Faustina Kowalska (Oct. 5), and, St. Teresa of Avila (Oct. 15), among others.

Foremost is the devotion to Our Lady of the Holy Rosary (originally instituted by Pope Saint Pius V as the feast of Our Lady of Victory to commemorate the miraculous Oct. 7, 1571 Victory at Lepanto) to which October is dedicated.

The Holy League’s naval victory over the Ottoman Turks at Lepanto, Gulf of Patras in Western Greece — though out-numbered three to one, the Holy League’s navy sank about 200 enemy ships, killing over 30,000 — spelled the decline of the Ottoman Empire, saving Christian Europe from going the way of another Faith. The Holy League (made up of the Venetian Republic, Papal States and Spanish Empire) attributed its victory to Christian Europe’s praying the Holy Rosary. The Venetian Senators declared after the Battle of Lepanto that: “It was not courage, not arms, not leaders, but Mary of the Rosary that made us victors!”

Then there is La Naval de Manila, the Philippines’ parallel to Lepanto when, in a series of five naval battles circa 1646, the out-numbered Spanish-Filipino forces repulsed the superior naval forces of the Dutch Republic which were attempting to conquer Manila. In commemoration of that victory (attributed to the intercession of the Blessed Virgin), the La Naval de Manila procession is likewise held in October, coinciding with the established devotion to the Lady of the Holy Rosary.

Yet another October event connected to the Virgin Mary is the Miracle of the Sun. On Oct. 13, 1917, amid the brewing Bolshevik Revolution (which erupted alongside the Great War of 1914-1918, with the deadliest pandemic of modern history, the Spanish flu, following soon), the miraculous solar phenomenon was witnessed by about 70,000 in Fatima, Portugal (shortly after the apparition of the Blessed Virgin who identified herself as the “Lady of the Holy Rosary”). Not long after, the Great War ended.

Ironically, it took 13 years (on Oct. 13, 1930) for the Bishop of Leiria, Portugal to accept the vision of the three peasant children — Lucia dos Santos and cousins Francisco and Jacinta Marto — as truly the apparition of the “Lady of the Holy Rosary.” And the devotion to the Immaculate Heart of the Blessed Virgin came about, so with the recitation of the Rosary for the cause of World Peace.

Not too long after the 1914-1918 Great War, the world was again facing a black time. There was a perceived waning of the public recitation of the Holy Rosary. And by late 1930s to mid-’40s, barely two decades after World War I, came the prophesied destructive modern war foreshadowed at Fatima. And the “ideology of Godlessness” was on the offensive: Communism rapping closer to the underbelly of the Free World.

The October miracle at Fatima was an alarm bell, an urgent call to return to prayer. “We put great confidence in the Holy Rosary for the healing of evils which afflict our times” said Pope Pius XII (1939-1958 pontificate). And the rest is history.

But how did the Rosary come about? Again, a bit of reverent trivia: the word “rosary” comes from the Latin word “rosarium” meaning “rose garden.” The same way “orchidarium” means “orchid garden.”

The Encyclopaedia Britannica describes the Rosary as a religious activity in which prayers are recited and counted on a string of beads called a chaplet — a kind of garland or wreath worn on the head in those early times — arranged in five decades.

The origin of the Holy Rosary of the Blessed Virgin as a popular Catholic method of public and private prayer is associated with St. Dominic, the founder of the Dominican Order, who received it, according to tradition, in that early-13th century Marian vision in Prouille, France. It reached its definitive form in the 15th century through the preaching of the Dominican, Blessed Alan de la Roche.

The Rosary’s mysteries — four sets of five mysteries each — emphasize the Rosary’s Cristocentric nature. The New Testament on a knotted cord, so to speak.

In 1520, Pope Leo X gave the Rosary official approbation. And in 1826, Venerable Pauline-Marie Jaricot founded the Living Rosary Association, supported by Pope Gregory XVI, receiving official canonical status in 1832. In a “Living Rosary,” people represent each bead of the rosary, with each person leading one prayer of the rosary.

Fittingly observed as Holy Rosary month, October beckons: that we pause a bit from the temporal, humble ourselves, give thanks, and, in the “noisy-confusion-of-life,” bend our knees in supplication — more so with COVID-19 still fiendishly challenging the mettle of medical science and economics, the resilience of our social fabric, and the depth of our Faith in this age of disruptions.

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.

 

Antonio “Tony” T. Hernandez is management and development finance consultant; Past President & Advisory Council member of the Government Association of CPAs; past Director of PICPA; and former senior officer of Land Bank of the Philippines.

map@map.org.ph

ath7543@yahoo.com

http://map.org.ph

Is Lord Allan Velasco qualified to be Speaker?

“I am the Speaker, I can always impeach the President,” Speaker Pantaleon Alvarez was supposed to have boasted. He must have concluded that if Speaker Manuel Villar could impeach President Joseph Estrada, he should also be able to impeach President Rodrigo Duterte.

While Speaker Villar was able to send a resolution signed by more than two-thirds of the members of the House that elevated the impeachment case to the Senate for trial, which eventually led to President Estrada’s untimely exit from Malacañang, Speaker Alvarez was removed from the Speakership shortly after he made his boast.

The Speakership is a position of power. The person who holds the position should be powerful by his own right, otherwise he becomes expendable. That is what Mr. Alvarez was — a political lightweight when he assumed the position of Speaker and therefore a pushover.

After he graduated from Ateneo’s Law School in 1983, he went into private practice of Law. In 1992, he became an action officer at the Manila International Airport Authority (MIAA). He was promoted to chief operating officer of MIAA in 1995, a position he held until September 1997.

He was elected representative of the 1st District of Davao del Norte in 1998. President Gloria Arroyo appointed him acting Secretary of Transportation and Communications in 2001. His stint was undistinguished. He was again elected representative in 2016. Newly elected President Duterte made known to his political allies in the 17th Congress that his preference for Speaker was his province mate and long-time friend.

His ascension to the Speakership was not by his own power but by virtue of the endorsement of his friend, President Duterte. So, when he bragged that he could impeach the president, the same person who got him to be speaker, he was unceremoniously pushed off the Speaker’s dais.

Speaker Villar remained unshakable in his position even if he had President Estrada impeached. He was a person of gravitas before he became Speaker. He was a recipient of many awards for his achievements in his professional and business career before entering politics in 1992. Forbes magazine had ranked him among the Top 5 richest men of the Philippines long before he became a member of Congress.

He took over the then moribund Nacionalista Party. He is known to have bankrolled the candidacies of many members of the House of Representatives. That is why it was a cinch for him to get elected speaker. President Estrada had no hand in his ascension to the Speakership.

Marinduque’s lone representative Lord Allan Velasco is supposed to take over the Speakership from Taguig representative Alan Peter Cayetano on Oct. 14. That is in accordance with a time-sharing agreement by which Mr. Cayetano was supposed to lead the House of Representatives for the first 15 months of the 18th Congress and Mr. Velasco to take over the remaining 21 months. The agreement was brokered by President Duterte and forged in his presence.

Speaker Cayetano offered to resign on Sept. 30, the day after President Duterte told him to honor the time-sharing agreement he entered into with Mr. Velasco. “Congressman Velasco told the President that he is ready. Then I think the best time to prove it is now. If colleagues want you today, go ahead. I am offering my resignation, my dear colleagues. My fate and the fate of the 2021 budget and the leadership of the house is in your hands.”

If the agreement was to be honored, Speaker Cayetano should have resigned outright on Oct. 14 to give way to Mr. Velasco. But he did not resign. He only offered to resign and left it to his colleagues in Congress to accept his offer or reject it. Whether Mr. Velasco is ready or not was beside the point. His agreeing to the time-sharing deal was not contingent on Mr. Velasco’s readiness to lead the Lower House.

Clever of Speaker Cayetano to leave it up to the members of Congress to decide who their leader should be. They were not party to the time-sharing deal and therefore not bound by it. That the deal was brokered by President Duterte is of no import to them. The legislative branch of government is co-equal with the executive branch and therefore independent of the president. So, Mr. Cayetano remains Speaker because the great majority of the members of the Lower House, 184 out of 243, or 75%, voted to reject his offer to resign. That means the overwhelming majority of the congressmen believe that Mr. Velasco is not ready to lead them.

When it was first bruited about that Lord Allan Velasco was one of the contenders for Speaker of the House, a popular broadcast political commentator asked, “Who he?” The public asked who indeed is this Velasco to be vying for the Speakership.

Lord Allan Velasco was first elected representative of the lone district of Marinduque in 2010. He ran for re-election in 2013 but was defeated by Regina Ongsiako Reyes, daughter of the governor of the province, Carmencita Reyes. However, he was proclaimed the representative of Marinduque on Feb. 1, 2016 after the House Electoral Tribunal removed Regina Reyes from her seat in the House of Representatives for being an American citizen. If it were not for that, Regina Reyes would be in Congress instead of Lord Allan Velasco.

Why then is Lord Allan Velasco, who is in the House of Representatives only by virtue of a technicality, supposed to be Speaker for the remaining months of the 18th Congress, people ask?

Well, as Mr. Velasco often says in interviews with broadcast journalists, he is President Duterte’s choice for Speaker. But as the President also wanted to accommodate the aspirations of Mr. Cayetano, his staunch political ally, the President proposed the time-sharing agreement.

Many wonder why Mr. Velasco is close to the President. He is not from Davao nor did he have any connection with the city unlike Bong Go and Bato de la Rosa, whom the President plucked out of obscurity and thrust to national prominence such that both are now senators of the realm. Mr. Velasco does not come from a political dynasty allied with the President as the Marcos and Villar families are.

Lord Allan’s father, Presbitero Velasco, is Governor of Marinduque. He went into politics only in 2019 when he ran for governor of Marinduque. He cannot be considered a long-time political ally of the President. He spent many years in the judicial branch of government. In fact, he was Associate Justice of the Supreme Court from 2006 until 2018, when reached the age of retirement.

One Supreme Court ruling penned by him was the dismissal of Senator Leila de Lima’s petition to nullify her arrest on drug charges. Associate Justice Antonio Carpio found Justice Velasco’s arguments inconsistent with those he (Velasco) used in many other cases. I discerned from Justice Carpio’s dissenting opinion that Justice Velasco performed legal contortions to keep De Lima, a vocal critic of President Duterte’s war on drugs, in jail. That must have pleased the President who had said, “She is going to rot in jail.”

Could that be why the President forged that time-sharing agreement by which Mr. Velasco would be Speaker, to return a favor to retired Justice Presbitero Velasco?

According to Congressman Velasco himself, the President told him, “We were duped by Cayetano.” That statement of the President implies submission to the machinations of Speaker Cayetano. That is uncharacteristic of the President, accepting the thwarting of his intentions. Whatever the President wants, people oblige, whether they be subordinates or from the supposed co-equal and independent legislative and judicial branches of government. Take the case of the Supreme Court keeping Senator De Lima in detention and ousting Chief Justice Lourdes Sereno, and the House of Representatives denying ABS-CBN a new franchise.

Could it be that President Duterte, like the overwhelming majority of congressmen, does not believe Lord Allan Velasco is ready or even qualified to be Speaker, which is why he submits to the will of the House of Representatives? He probably feels he has returned the favor to Lord Allan’s father by brokering the time-sharing deal.

 

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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