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ICC probe of Duterte drug war against self-rule, says Palace

THE INTERNATIONAL Criminal Court (ICC) would violate Philippine sovereignty if it sends envoys to probe President Rodrigo R. Duterte’s deadly drug war, according to the presidential palace.

“Only local institutions have jurisdiction to try anyone, including the President, for any crimes that happened here in our country,” presidential spokesman Harry L. Roque told DZBB radio on Wednesday in Filipino.

The ICC on Tuesday said there was reasonable basis to believe that crimes against humanity had been committed in connection with Mr. Duterte’s anti-drug campaign.

Those crimes including murder, torture, infliction of serious physical injury and mental harm took place between July 1, 2016 and March 16, 2019, Chief Prosecutor Fatou Bensouda’s office said in its annual report.

The report cited allegations that some people had been subject to “serious ill-treatment and abuses” before being killed by authorities and other unidentified assailants.

Most of the victims of the alleged crimes had been suspected drug pushers from poor neighborhoods, it said.

A final decision on a formal ICC probe could come in the first half of next year, according to the report.

Salvador S. Panelo, the President’s chief legal adviser, rejected the ICC report.

“The Philippine government does not sponsor any unlawful acts that may result in any killing or violent activity,” he said in a statement. “Nor does it allow any widespread or systematic attack directed against any civilian population.”

The ICC prosecutor started a preliminary probe into the killings of thousands of suspected drug users and peddlers in the Philippines in February 2018. Some of these were killed by police for allegedly resisting arrest or gunned down by law enforcers disguised as vigilantes.

Mr. Roque earlier dismissed the report, saying the ICC does not have jurisdiction over the Philippines after it withdrew from the body last year.

Mr. Duterte, who assumed office in 2016, had promised a relentless war against drugs, making it a major campaign platform.

In 2017, he told police officers to “shoot and kill” drug suspects. “I will kill more if only to get rid of drugs,” he said at that time.

The Commission on Human Rights in 2019 placed the death toll from the drug war at more than 27,000. — Gillian M. Cortez

Nationwide round-up (12/16/20)

House to vaccinate own workers

THE House of Representatives will allot at least P50 million for the vaccination of more than 2,000 workers and accredited journalists covering the chamber against the coronavirus, Speaker Lord Allan Q. Velasco said on Wednesday.

Five immediate family members of House employees and accredited media will be included in the House’s mass vaccination program, he told reporters in a Viber group message.

“This is for the normalcy of business,” he said. “We just want the legislative mill to be grinding.” Mr. Velasco said the House would most probably get the vaccines from China’s Sinovac Biotech Ltd. or British manufacturer AstraZeneca Plc.

Lawmakers would not be prioritized in the vaccination drive, Mr. Velasco said, adding that only the “remaining doses” would be used for them.

Funding would come from the House’s internal budget for next year.

Data from the House showed that 191 people, including lawmakers and staff, have been infected with the coronavirus disease 2019 (COVID-19) virus.

The government lists employees of agencies and local government units as the seventh group that would be prioritized for the mass vaccination, after health workers, senior citizens, the poor, uniformed personnel and school workers. — Kyle Aristophere T. Atienza

OFW bill will have to wait

SENATE action on a proposed Department of Overseas Filipinos will be tackled in January, a Senate President Vicente C. Sotto III said on Wednesday.

He told reporters it would be impossible to take up the measure because the chamber is set to adjourn for a month-long break until Jan. 17.

This comes after President Rodrigo R. Duterte on Tuesday certified Senate Bill 1949, which seeks to create the agency, as urgent.

The bill will streamline government response to concerns of migrant Filipino workers and their families. It will also assume functions of the Labor department and Overseas Workers Welfare Administration (OWWA) relating to migrant workers. The measure is being pushed in the chamber after the coronavirus pandemic led to the displacement of Filipino workers overseas.

In its last count, the Department of Foreign Affairs (DFA) reported that more than 300,000 Filipinos have come home since February.

The Senate labor committee headed by Senator Emmanuel Joel J. Villanueva deferred hearings on the bill over bureaucracy issues.

Senator Franklin M. Drilon earlier said the government rightsizing bill should first be tackled to address the bloated bureaucracy. — Charmaine A. Tadalan

Bill on disaster budgets passed

A HOUSE of Representatives committee on Wednesday endorsed a bill that seeks to extend the validity of appropriations for projects meant to ease the effects of disasters.

The House disaster resilience committee approved House Bill 8076, which will authorize the President to extend the validity to as long as two years.

This will ensure that recovery programs during national emergencies will get the budgets they need.

The bill described a national emergency as any event that threatens national security.

Projects must be awarded after a competitive public bidding, according to a copy of the bill.

No project should be implemented through a negotiated contract “except those authorized by the President to respond to a national emergency subject to rules and conditions.” — Kyle Aristophere T. Atienza

Ambassador appointments OK’d

THE COMMISSION on Appointments (CA) confirmed the appointment of two Philippine ambassadors on Wednesday.

The body during a session confirmed the nomination of Leslie J. Baja as the Philippine ambassador to the Kingdom of Morocco and of Raymond R. Balatbat as the Philippine ambassador to Lebanon.

Mr. Baja also has concurrent jurisdiction over the Republic of Guinea, Republic of Mali, Islamic Republic of Mauritania and Republic of Senegal.

Aside from the two envoys, the appointment body also approved the ad interim appointment of Leandro Luiz S. Manantan as a foreign service officer. — Kyle Aristophere T. Atienza

Regional Updates (12/16/20)

Red tide warning lifted

THE BUREAU of Fisheries and Aquatic Resources (BFAR) has lifted the red tide warning for Inner Malampaya Sound in Palawan, Matarinao Bay in Eastern Samar and San Pedro Bay in Western Samar.

Consumers may now eat shellfish from these areas, the agency said in a bulletin on Wednesday.

The red tide warning stays for Bataan province, particularly the areas of Mariveles, Limay, Orion, Pilar, Balanga, Hermosa, Orani, Abucay, and Samal; Honda and Puerto Princesa bays in Palawan; Milagros in Masbate; Sorsogon Bay in Sorsogon; Dauis and Tagbilaran City in Bohol; and Tambobo Bay in Negros Oriental. Also affected by red tide are Daram Island, Zumarraga, Cambatutay, Irong-irong, Maqueda, and Villareal Bays in Western Samar; Calubian, Cancabato Bay and Carigara Bay in Leyte; Biliran Island; Guiuan in Eastern Samar; Balite Bay in Davao Oriental; and Lianga Bay and Hinatuan in Surigao del Sur.

All types of shellfish and acetes or alamang from these areas are not safe for human consumption, BFAR said. Other marine species may be eaten as long as these are properly handled and prepared. — Revin Mikhael D. Ochave

NCR barred from pilot classes

SCHOOLS in the National Capital Region (NCR) won’t take part in the pilot run for face-to-face classes in January since it is still under a general lockdown, according to the Department of Education (DepEd).

Schools nominated to the pilot test should at least be in areas under a modified general community quarantine, Malcolm S. Garma, director of the agency in the National Capital Region, told an online news briefing on Wednesday.

More than a thousand out of 61,000 schools in the country have been nominated to take part in the pilot run, Education Secretary Leonor Briones told the same briefing.

“It’s not mandatory,” she said in Filipino. “It’s going to be voluntary, with the consent of parents.”

Ms. Briones said parents’ reactions to the plan were mixed. She said the government would ensure that students and teachers who will volunteer in the program would be safe.

The face-to-face classes will run from Jan. 11 to 23. President Rodrigo R. Duterte in June said he would not allow physical classes in the absence of a coronavirus vaccine. — Gillian M. Cortez

Bayanihan III bill worth P485B filed in Senate

A THIRD stimulus package worth P485 billion to help the economy recover from the pandemic and the late-year typhoons has been filed in the Senate.

The Bayanihan III stimulus package formally known as Senate Bill (SB) No. 1953 or the proposed Bayanihan to Rebuild as One Act, does not contain a grant of special powers to President Rodrigo R. Duterte, unlike the first and second rounds of stimulus.

The Bayanihan to Heal as One Act, or Republic Act No. 11469, and the Bayanihan to Recover as One Act, RA 11494, respectively authorized packages of P375 billion, and P140 billion with P25.5 billion in standby funding.

“Notwithstanding these measures which cushion the socio-economic impact of the pandemic, our agony is not yet over as three typhoons which hit the Philippines in October and November 2020 had exacerbated the disastrous impact of COVID-19 (coronavirus disease 2019),” Senator Ralph G. Recto said in the bill’s explanatory note.

He said SB 1953 is the counterpart measure of House Bill No. 8031, written by Marikina Representative Stella Luz A. Quimbo.

The bill allocates P55 billion for COVID-19 vaccines and other medications and another P20 billion for vaccine storage. At present, a total of P82 billion in programmed and unprogrammed funds has been allotted for the vaccine rollout.

It will also provide an additional P35 billion to hire contact tracers, fund testing and treatment, and provide hazard pay.

Some P100 billion will be earmarked each for worker subsidies and capacity-building in hard-hit sectors; P70 billion in cash assistance to households under the social amelioration program, and P20 billion for households affected by the typhoons.

Some P30 billion will be provided for displaced workers, P50 billion for the rehabilitation of typhoon-hit areas, and a P5-billion internet allowance for teachers and students via the Department of Education and Commission on Higher Education.

The government placed Luzon on lockdown in mid-March to contain the spread of the virus. Quarantine rules remain in force at varying levels of severity across the country.

The economy contracted 10% in the first nine months, which could worsen due to the impact of five typhoons in October and November. The National Economic and Development Authority has estimated that the storms caused P90 billion worth of output to be lost. — Charmaine A. Tadalan

Asia-Pacific job losses during pandemic estimated at over 81M

THE International Labor Organization (ILO) said over 81 million jobs were lost in the Asia-Pacific region as countries struggled to maintain employment levels during the pandemic.

The ILO said Wednesday in its report, Asia–Pacific Employment and Social Outlook 2020: Navigating the crisis towards a human-centred future of work that the unemployment rate in the region could rise to 5.2-5.7% in 2020 from 4.4% in 2019.

“Using available Labor Force Survey data and additional input data in a nowcasting model, the report estimates a resulting jobs gap in 2020 at the regional level of 81 million as a result of the crisis,” the ILO said.

The working hours lost metric — an indicator of workers who idled or relegated to part-time employment — also remained weak this year, falling 15.2% in the second quarter and 10.7% in the third quarter.

The ILO said the hours lost in the second quarter was equivalent to 265 million full-time jobs.

Income also deteriorated in the region, the ILO said, noting: “With fewer paid hours of work, median incomes are falling. Overall, labor income is estimated to have fallen by as much as 10% in the Asia–Pacific region in the first three quarters of 2020, equivalent to a 3% loss in gross domestic product.”

ILO Assistant Director General and Regional Director for Asia and the Pacific Chihoko Asada Miyakawa said in a statement that the region continued to struggle in terms of addressing the immediate needs of workers.

“COVID-19 has inflicted a hammer-blow on the region’s labor markets, one that few governments in the region stood ready to handle. Low levels of social security coverage and limited institutional capacity in many countries have made it difficult to help enterprises and workers back on their feet, a situation compounded when large numbers remain in the informal economy,” she said.

In a phone interview with BusinessWorld on Wednesday, Employers Confederation of the Philippines President Sergio R. Ortiz-Luis, Jr. said the ILO’s findings also reflected Philippine conditions. However, he added that things are “looking up” now that the economy is gradually reopening.

BusinessWorld asked labor unions for comment but they had yet to reply at deadline time. — Gillian M. Cortez

P1B added to LANDBANK farmer lending program

THE Department of Agriculture (DA) has given P1 billion to the Land Bank of the Philippines (LANDBANK) to serve as additional funding for an emergency loan programs targeted at small farmers and fisherfolk.

At a virtual ceremony on Dec. 15, Agriculture Secretary William D. Dar and LANDBANK President Cecilia C. Borromeo signed the fund transfer agreement, which also outlines the implementing rules for the DA’s loan program.

The funds were allocated under Republic Act No. 11494 or the Bayanihan to Recover as One Act. The program is expected to benefit around 40,000 eligible borrowers.

“This is our way of helping agri-fishery micro, small and medium enterprises (MSMEs), and small farmers and fishers recover from their losses, as they play a crucial role in ensuring the availability of food in Metro Manila and other urban centers,” Mr. Dar said.

Under the loan program, small farmers and fisherfolk may borrow up to P25,000 with no collateral and zero interest, payable in 10 years.

The funds can be used for production, post-harvest, processing, marketing, and other activities in the food supply chain.

Meanwhile, Ms. Borromeo said by the end of November, LANDBANK had lent P7.76 billion to the agriculture sector, benefiting 228,000 farmers.

“We welcome this opportunity to distribute timely, responsive, and non-interest bearing financing for small farmers and fishers, whose sources of livelihood and income are adversely affected by the ongoing pandemic,” Ms. Borromeo said.

The DA said an initial P2.5 billion was allotted for the loan program, which has been fully released to more than 535,000 farmers during the early stages of the pandemic.

“We will continue what we have started because it is our moral obligation to provide food for all Filipinos, and we start by helping our frontliners in the countryside,” Mr. Dar said. — Revin Mikhael D. Ochave

Agri dep’t lifts suspension on poultry imports from Brazil

THE Department of Agriculture (DA) said it lifted the suspension on poultry imports from Brazil, after Brazilian veterinary authorities submitted certifications requested by the Philippines.

In a memorandum order signed on Dec. 14, Agriculture Secretary William D. Dar said the DA was assured of the precautions taken at Brazilian processing plants against contamination with coronavirus disease 2019 (COVID-19).

In August, the DA barred the entry of poultry from Brazil after China found traces of SARS-CoV-2, the virus that causes COVID-19, in chicken meat.

Mr. Dar said Brazil has given “satisfactory” evidence of safe handling at the processing plants.

“Brazil has provided evidence that the safety protocols enforced in different accredited meat establishments are equivalent to the guidelines established by the Philippines relative to the mitigating measures against COVID-19 in meat establishments,” Mr. Dar said.

Jesus C. Cham, president of the Meat Importers and Traders Association (MITA), said the ban’s lifting is a welcome development for the meat industry.

Mr. Cham expects the poultry supply from Brazil to normalize by the end of the first quarter of 2021.

“Both countries should now put this incident behind them and move forward,” Mr. Cham said in a mobile phone message.

In October, Brazil wrote to the Department of Foreign Affairs, calling the ban “unjustified” in the wake of the adoption of safety procedures.

The DA partially lifted the suspension on Brazilian poultry in September for mechanically deboned meat.

According to data from the Bureau of Animal Industry, Brazilian meat imports account for 16.1% or 121,952 metric tons of total meat imports.

Separately, the DA ordered the suspension of poultry imports from parts of Poland, Belgium, South Korea, the UK, and Japan due to reported outbreaks of two strains of Highly Pathogenic Avian Influenza (HPAI), or bird flu.

In five separate memorandum orders, Mr. Dar prohibited imports of domestic and wild birds and their products including meat, day-old chicks, eggs, and semen from Wielkopolskie, Poland, West-Vlaanderen, Belgium, Jeollabuk-Do, South Korea, England, and multiple locations in Japan.

The ban also includes the suspension on the processing, evaluation, and issuance of sanitary and phytosanitary import clearances for all such products.

“There is a need to prevent the entry of HPAI virus to protect the health of the local poultry population,” Mr. Dar said.

MITA’s Mr. Cham said the regional bans may prolong the tight supply conditions here, but will not have much of an effect on the sector. — Revin Mikhael D. Ochave

PHL wheat import outlook cut on weak animal feed demand

PHILIPPINE wheat imports are expected to total 6.8 million metric tons (MT) in the 2020-2021 marketing year (MY), downgrading its previous estimate of 7 million MT due to weaker demand for animal feed, the US Department of Agriculture (USDA) said.

In a report, the USDA’s Foreign Agricultural Service said the Philippine trade in wheat rose 9% year on year to 2.3 million MT in the three months to September, which is also the first quarter of MY 2020-2021.

“Milling wheat from the US drove this growth, as contacts report the bakery and noodle sectors doing well during the pandemic,” the USDA said.

“With 1 million MT shipped from July to September, the Philippines is currently the largest destination for US wheat,” it added.

The USDA added that a decline in feed wheat consumption due to African Swine Fever (ASF) is expected to offset higher milling wheat demand.

It said Philipine hog producers have downsized due to ASF, with more than 400,000 animals culled as a result of the virus.

The USDA said the animal feed segment will also be hampered by restrictions on the issuance of Sanitary and Phytosanitary Import Clearances (SPSICs), and additional requirements for obtaining the document.

“Importers have reported unpredictability in the issuance of import clearances during the last three months,” the USDA said.

Meanwhile, the USDA projected Philippine corn production for MY 2020-2021 at 8.2 million MT, across a harvestable area of 2.6 million hectares.

It added that corn imports during the period at 600,000 MT.

Under the new guidelines set by the Department of Agriculture, new requirements are now needed for corn and wheat import clearances, including a description of the commodities, an affidavit declaring the shipment’s purpose, and a separate SPSIC for every shipment with a different declared purpose, among others.

“Industry contacts have noted that new requirements in the recently issued Memorandum Circular No. 39 could disrupt corn exports and limit feed availability and affordability in 2021,” the USDA said.

The USDA estimated Philippine rice output at 12 million MT during MY 2020-2021, harvested over 4.65 million hectares.

Its rice import estimate was cut to 2.3 million MT for the year from the previous estimate of 2.6 million MT, as a result of the SPSIC bottleneck.

“The Bureau of Plant Industry (BPI) issued 678 SPSICs from July to October in 2020 for 490,441 MT, down 53% from the 1.19 million MT representing 1,462 SPSICs issued during the same period in 2019,” the USDA said. — Revin Mikhael D. Ochave

New streamlined process for resolving IP disputes seen boosting small firms

TRADE Secretary Ramon M. Lopez

TRADE Secretary Ramon M. Lopez said the revised rules of procedure that will streamline the intellectual property dispute process will provide a boost to small businesses and aid in the economy’s recovery.

“The Revised Rules signal a whole-of-government advocacy in empowering our people to contribute to our country’s national and socioeconomic progress through the development of their Intellectual Properties (IPs),” he said in his message at the launch of the rules, hosted by the Supreme Court.

“Thus, we are confident that these Revised Rules will aid our industries, inventors, artists, designers, creators, as well as our micro, small and medium enterprises (MSMEs) (in maximizing) the benefits of their IP rights,” he added.

Mr. Lopez also said that the revised rules “will foster a legal atmosphere that will spur creative activity and innovation, technology transfer, and foreign investment.”

The new rules took effect on Nov. 16.

Mr. Lopez said the new process is important because many businesses, particularly MSMEs, were significantly affected by the pandemic.

He also noted that the pandemic accelerated the digital shift, citing the number of online businesses registered, which totaled 86,000 in the year to date from 1,700 in March.

“With IP as a catalyst for our country’s growth, we believe that the Judiciary’s activities on IP rights will enhance the government’s efforts to accelerate our economic recovery,” he said.

Rowel S. Barba, director-general of the Intellectual Property Office of the Philippines (IPOPHL), said the new process is timely because technology is “being used and abused to commit counterfeiting, piracy, infringement and other forms of IP rights violations,” an environment he called “more challenging than ever.”

“The Revised Rules drafted with the valuable inputs from the courts, law enforcement agencies, the IPOPHL, practitioners, IP stakeholders and members of the Supreme Court, has certainly taken into account the numerous logistics, legal and operational challenges,” he said. — Vann Marlo M. Villegas

House adopts Senate versions of bills extending budget validity, creating coco trust fund

THE House of Representatives on Wednesday adopted the Senate version of a bill extending the validity of the 2020 Budget until the end of 2021, and another Senate measure creating the coconut levy trust fund, with both actions billed as necessary to provide economic relief.

With no votes opposing, House legislators adopted the Senate counterpart to House Bill (HB) No. 6656, which aims to extend the validity of this year’s budget until Dec. 31, 2021 by amending Republic Act No. 11465 or the General Appropriations Act of Fiscal Year 2020.

The measure seeks to continue financing from the 2020 Budget infrastructure projects that have reached the procurement stage, to help spur the recovery next year.

The House likewise adopted the Senate counterpart of HB No. 8136, or the proposed Coconut Farmers and Development Trust Fund Act, which will form a trust fund out of coconut levy assets, with proceeds from the trust’s investments helping rehabilitate and modernize the coconut industry.

The bill allows poor coconut farmers to benefit from taxes collected from them decades ago, now equivalent to around P76 billion.

Speaker Lord Allan Q. Velasco said he hopes the once-vetoed legislation will be signed into law by President Rodrigo R. Duterte “this time around.”

Quezon Representative Wilfrido Mark M. Enverga, chairman of the House committee on agriculture and food, said the concerns cited in the veto of the first coconut levy bill last year “have been addressed” in the new measure.

“We are very careful in crafting this new version of the bill so we are confident that we have resolved everything,” Mr. Enverga at a briefing in the House.

“We ensured that there is a limitation of 99 years. Secondly, with regard to the broad powers given to the Philippine Coconut Authority, we addressed this by delineating powers of implementing authority to the newly-constituted Board of the PCA (Philippine Coconut Authority),” he said. “We also established a Trust Fund Management Committee, composed of the Department of Budget and Management and Department of Justice.”

The House also approved on second reading HB No. 8145, which seeks to extend to 2041 the applicability of lifeline rates — in effect, subsidized electricity — for low-income users. The bill seeks to amend Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001.

Mr. Velasco, one the bill’s proponents, has said the proposed legislation would allow low-income households continued access to electricity during the pandemic. — Kyle Aristophere T. Atienza

Adoptive mothers and maternity leave

As a city dweller, my family always looks forward to Saturday nights because apart from the well-deserved break from work and online school, it is our family’s “movie night.” After dinner, we set up foam beds in our living room and imagine that we are out camping, but with an outdoor cinema. It’s nothing fancy, but what makes it special is the consistency and the commitment to make it happen every Saturday. It’s the secret to our family bond.

Just last week, we watched Instant Family, a movie about a couple that became adoptive parents of three siblings from foster care. It gives you a glimpse of the joys and travails of adoption, obscuring the difference between pregnancy and the adoption process, between giving birth and adopting a child. In either case, one becomes a parent from Day 0 which leads me to raise this question: Can adoptive mothers claim maternity leave under the 105-Day Expanded Maternity Leave Law (EMLL), which biological mothers enjoy?

Republic Act (RA) No. 11210 or the EMLL grants all covered female workers in government and the private sector, including those in the informal economy, regardless of civil status or the legitimacy of her child, 105 days’ maternity leave with full pay and an option to extend for an additional 30 days without pay. For female workers who qualify as a solo parent under RA No. 8972, or the Solo Parents’ Welfare Act, an additional 15 days’ maternity leave with full pay is granted. In instances of miscarriage or emergency termination of pregnancy, 60 days’ maternity leave with full pay is granted.

Section 3 of the EMLL specifically mentions pregnancy, miscarriage, or emergency termination of pregnancy as a prerequisite to qualify for maternity leave. No other cases are mentioned that would seem to cover the circumstances of an adoptive mother. Thus, if we look only at the EMLL, it appears that adoptive mothers are not eligible to claim maternity leave.

However, the good news is that memos and resolutions have been issued by the Civil Service Commission (CSC) and the Department of Social Welfare and Development (DSWD) stating otherwise, citing provisions of RA No. 8552 or the Domestic Adoption Law.  Section 12 of which provides that if a child is below seven years of age and is placed with the prospective adopters through a pre-adoption placement authority issued by the DSWD, the prospective adopters are to enjoy all the benefits to which biological parents are entitled from the date the adoptee is placed in that household.

The eligibility of adoptive parents is further supported by Section 34 of the Implementing Rules and Regulations of RA No. 8552, which state that adoptive parents enjoy all the benefits to which biological parents are entitled as regards the adopted child. Maternity and paternity benefits given to biological parents upon the birth of a child may be availed of if the adoptee is below seven years of age as of the date the child is placed with the adoptive parents through the Pre-Adoptive Placement Authority issued by the DSWD.

Although another law supports the rights of the adoptive mother to maternity leave benefits, it would be impractical for adoptive mothers to comply with the documentary requirements (i.e. proof of pregnancy) mandated by the government agencies or the Social Security System (SSS) to claim maternity leave benefits under the EMLL.

Say the employer grants the 105-day leave with full pay to the adoptive mother on account of the EMLL, does the benefit qualify as tax-exempt?

In the Bureau of Internal Revenue’s Revenue Memorandum Circular (RMC) No. 105-2019, a female worker is entitled to full pay during maternity leave which consists of (i) SSS maternity benefit computed based on her average daily salary credit and (ii) salary differential to be paid by the employer, if any.

Both the SSS maternity benefit and the salary differential are exempt from income and withholding taxes based on  Section 2.78.1(B)(1)(e) of Revenue Regulation No. 2-98, granting tax exemption on payments of benefits under the Social Security System Act of 1954, as amended (now RA No. 11199 or the Social Security Act of 2018, which is known as the SSS Law).

Considering that maternity leave for adoptive mothers is not covered under the SSS Law, one cannot avail of the tax exemption discussed under RMC No. 105-2019. Thus, it is my opinion that the leave benefit with full pay granted to adoptive mothers is taxable even if the leave was granted following the rules under the EMLL.

The EMLL and the joint implementing rules and regulations issued by the CSC, Department of Labor and Employment, and SSS were created in recognition of the maternal function of women as a social responsibility and to provide them with ample transition time to regain health and overall wellness, as well as to assume their maternal roles before resuming paid work. Although adoptive mothers do not go through pregnancy and labor, which requires them to regain their health and overall wellness, adoptive mothers also need time to bond and nurture a relationship with their child, one of the prime objectives of the EMLL. Thus, it would be worthwhile if the EMLL and other related benefits can be explicitly granted as well to adoptive mothers. After all, a mother is a mother, with or without the labor pains.

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

 

Floredee T. Odulio  is a Director at the Client Accounting Services group of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 8845-2728

floredee.t.odulio@pwc.com

Child Trust Fund

One cannot help but be wary whenever the government proposes the creation of a “fund” to benefit people. The state’s track record, at least based on my perception, is less than sterling when it comes to ensuring fund profitability, long-term sustainability, and equitable distribution of benefits. Also, there have been numerous scandals involving corruption and mismanagement.

Through the years, the government has created all sorts of funds to cover pension, retirement, housing, and healthcare, among others. Now, another fund is being proposed: Child Trust Fund (CTF) to cover college-related expenses for those 18 years old and above. This fund is for school-related expenses only because tuition is already free in public schools and state universities.

“The fund can also be managed by either the government [or] part of it can also be cut out to be managed by the private sector. We are still on the exploratory stage and we would like to do a more detailed or granular study on the CTF and [then] to sell it to the [Capital Market Development] Council in the coming meetings,” National Treasurer Rosalia V. de Leon said in a statement.

The proposed CTF can subsidize daily expenses of college students like daily allowance, transportation, lodging, and other fees. Money can be drawn from the fund once a student turns 18, and those from poorer households can get more.

BusinessWorld reported recently that Ms. De Leon cited two possible models for the proposed CTF.

One is the United Kingdom model that created over six million tax-free trust fund accounts to save up for future educational expenses of children born between Sept. 1, 2002 and Jan. 2, 2011. The UK government gave seed capital of £250-500 (P16,000-P32,000) per child to create the trust fund. The UK trust fund ended in 2011.

The other model is Singapore’s Education Endowment or Edusave Scheme. The SG government gave 4,000 Singapore dollars to each recipient child seven years old and above, to cover 10 years of schooling in primary and secondary education. The fund account is closed once the child turns 16, and unused funds are transferred to other accounts.

No other details were given regarding the local proposal, considering it is still basically a concept. I am not surprised that such trust funds were actually successful in the UK and Singapore. Those two countries rank relatively high when it comes to people’s trust in their government; the government providing efficient service; and, in terms of battling corruption.

In our case, however, I am skeptical if such a fund is a good idea. I mean, it can work, and may just be helpful particularly for poorer families. And if the fund is also privately managed, then maybe it can be managed well to ensure profitability and sustainability. But I am always worried when it comes to large sums of money being handled by the government.

One just needs to recall past scandals involving AFP-RSBS and PhilHealth, and how these funds were allegedly mishandled by government appointees in one way or the other. There is always this mistaken appreciation that such trust funds are government money, and that government — through appointees — can do whatever it wants with the money.

The fact of the matter is, as far as I am concerned, such funds are actually owned by members of the fund — and that the government — or its appointees — are just trustees tasked with managing the fund. The goal, of course, is always conservation. Trustees manage the fund for the benefit of beneficiaries. Rules and decisions should thus be made in consultation with fund owners.

Take the case of PhilHealth and Pag-Ibig, and pension systems SSS and GSIS. These entities are funded by “contributions” from “members.” In fact, these funds come from mandatory deductions from workers. Conceptually, these funds should benefit the very people they are collected from. However, in our experience, this has not always been the case.

At times, it is a matter of government appointees heading these agencies making decisions that tend to disadvantage the fund owners themselves. For instance, in the 1990s, mismanagement put the military pension system at major risk. Bosses of AFP-RSBS, which was funded from soldiers’ contributions, opted to imprudently invest in real estate.

When the 1997 financial crisis hit, and real estate tanked, the pension fund lost lots of money, to the detriment of soldiers. It was also later discovered that RSBS bosses allegedly favored companies — and formed joint ventures — with real estate companies identified with senior military officials, extending as much as P2 billion in loans to them. There were also allegations of overpricing land acquisitions.

And then there is PhilHealth, where only recently a whistleblower alleged that about P15 billion in PhilHealth funds were stolen by government-appointed managers through various fraudulent schemes over the years. Allegations include unauthorized release of COVID-19 funds even to hospitals that have not yet recorded COVID-19 cases; overpricing computer systems; and, manipulating operations to block corruption investigations.

Over the years, even funds like SSS, GSIS, and Pag-Ibig have not been spared from allegations of mismanagement, bad investment, corruption, or giving “favors” to “friends” of the powers that be. Even these agencies’ choices of stock investments have been put into question at one time or the other, or how said investments have allowed these funds to impact company takeovers.

I have no strong objection to the creation of a Child Trust Fund, as long as the government can guarantee that such a fund can be free from manipulation, mismanagement, and corruption. And that its creation and operation will truly benefit the beneficiaries. In this line, the first order of the day is a truly extensive study on how such a fund can be operated and protected.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

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