Virus ends 21-year growth streak

May 8, 2020 | 12:33 am

THE Philippine economy unexpectedly shrank in the first quarter, as strict lockdown measures aimed at containing the coronavirus outbreak brought economic activity to a near standstill, the Philippine Statistics Authority (PSA) reported on Thursday.

Using the new base year of 2018, gross domestic product (GDP) contracted 0.2% in January to March, ending 84 quarters or 21 years of uninterrupted growth.

The last time GDP fell into negative territory was in the fourth quarter of 1998, when the economy contracted by 3% amid the Asian financial crisis.

The first-quarter result was a reversal from the 6.7% and 5.7% growth recorded in the previous quarter and in the first quarter of 2019, respectively. It was also worse than the 2.9% median estimate in a BusinessWorld poll of 11 economists conducted last week.

However, this was still within the Cabinet-level Development Budget Coordination Committee’s projection last month that the economy could contract by 0.8% or post zero growth this year.

“Our country has faced significant socio-economic risks and shocks during the first quarter of 2020, all totally unexpected: the Taal Volcano eruption in January; a significant decline in tourism and trade starting in February due to the COVID-19 pandemic; and the need to implement the enhanced community quarantine (ECQ) in Luzon and other parts of the country starting March,” National Economic and Development Authority (NEDA) Acting Secretary Karl Kendrick T. Chua said in yesterday’s news briefing.

Mr. Chua acknowledged that containing the spread of COVID-19 through the ECQ “has come at great cost to the Philippine economy,” but added that the government’s priority is “to protect lives and health of our people.”

In mid-March, the government placed Luzon, which accounts for over 70% of GDP, under an ECQ that halted nearly all economic activity and domestic consumption.

The first-quarter result provided a detailed look into the damage caused so far by the coronavirus on the economy.

Among major economic sectors, agriculture and industry posted declines of 0.4% and 3% in the first quarter, a turnaround from their respective growth rates of 0.5% and 4.9% in the same quarter last year.

Bucking the trend was services, which grew 1.4% in the first quarter. This was, however, slower than last year’s 7.1%.

On the expenditure side, household spending recorded 0.2% growth, slower than 6.2% in the first quarter of 2019.

Government spending grew by 7.1%, slower than the 17% growth in the previous quarter, but faster than 6.4% in the first quarter of 2019.

Private investment, which is represented in the data as capital formation, posted an 18.3% decline compared to a 9.8% expansion in the same three months last year.

Exports and imports of goods and services also contracted to three percent and nine percent, reversing from their respective growth rates of 4.2% and 8.9% last year.

Gross national income — the sum of the nation’s GDP and net income received from overseas — posted a 0.6% decline in the first quarter compared to growth rates of 5.8% in the previous quarter and 5% in 2019’s comparable three months.

“Data from [the first quarter] show the lockdown had indeed severe economic consequences: private consumption expanded at its slowest pace in at least 20 years, while fixed investment contracted from the previous year. These two components have been the main drivers of growth in the Philippines for the past 10 years,” HSBC Global Research Economist Noelan C. Arbis said in a note to reporters.

“GDP data by sector were similarly dire, with agriculture and industrial activity both declining from the previous year, while services activity expanded at its slowest pace in at least 20 years as well,” he added.

DEEPER CONTRACTION SEEN
The worst may be yet to come in the second quarter, as the Luzon lockdown continued throughout April. Since May 1, some low-risk areas have been downgraded to a general community quarantine (GCQ) that allowed a gradual resumption of work and economic activity. However, Metro Manila and other high-risk areas remain under ECQ until May 15.

The number of COVID-19 cases in the country reached 10,343, with 685 deaths and 1,618 recoveries, the Health department reported on Thursday.

A recession appears likely as Mr. Chua said the second-quarter GDP result “might be worse.”

However, he pointed out that many areas have gradually transitioned into a GQC.

“[T]he main difference is in the ECQ, the maximum number of people that can really work and the maximum value-added that the economy can operate is… closer to 25%. Under the GCQ it is closer to 75%. So, what this means is that there is a chance that we minimize the contraction [in the second quarter]…,” Mr. Chua said.

“[W]e are using our policies to proactively manage our trajectory, so that by the second half, we can recover gradually.”

Finance Secretary Carlos G. Dominguez III expects the economy to bounce back in the second half, on the back of government plans to accelerate infrastructure spending, implement social programs and other measures in order to restore consumer confidence. However, he noted this would depend on the availability of a COVID-19 cure and if the pandemic will be under control at that time.

“[The] [g]overnment plans to restart the domestic economy soon enough would have to be balanced with relaxing mobility restrictions in such a way as not to trigger an infection resurge that could lead us back to square one,” Mr. Dominguez said in a statement.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno also expressed disappointment with the first-quarter results.

“But there could be a strong bounce back by 4^th quarter, so there’s hope that we may not be in a recession this year,” he said in a separate virtual meeting on Thursday.

For ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa: “[T]he current lockdown which spans almost a full two months of [the second quarter] will undoubtedly drag GDP deep into contraction as we see how destructive the ECQ can be for the consumption-driven economy. The [first-quarter] GDP report moves us to downgrade our current -2.2% full-year growth forecast to -2.9% for the year,” he said in a note.

In a separate note, Capital Economics’ Emerging Markets Economist Alex Holmes said the lockdown had a severe impact on Philippine economic activity.

“(Philippine) growth is likely to be even worse than we feared in 2020. We are downgrading our forecast from -4% to -6%,” he said.

In a Viber message sent to reporters, Albay Rep. and House Ways and Means Committee Chairman Jose Maria Clemente S. Salceda said the first-quarter result shows that “this crisis is unprecedented, and will require similarly unprecedented action.”

“Congress will work hand in hand with the executive to get an economic stimulus and recovery plan passed, hopefully in a matter of weeks. Consumer and business confidence will be key, so government action must inspire confidence in the people,” Mr. Salceda said. — Lourdes O. Pilar with inputs from Genshen L. Espedido, Beatrice M. Laforga, and Luz Wendy T. Noble

Gross domestic product quarterly performance (Q1 2020)

May 8, 2020 | 12:32 am

Fitch Ratings lowers Philippines’ outlook to ‘stable’

May 8, 2020 | 12:32 am

By Luz Wendy T. Noble
Reporter

FITCH RATINGS on Thursday evening downgraded its outlook for the Philippines to “stable,” less than three months since it gave a “positive” outlook, as the economy faces a recession amid the coronavirus pandemic.

At the same time, the global debt watcher affirmed the country’s credit rating at “BBB” — a notch above the minimum investment grade which it gave in December 2017.

“The revision of the outlook reflects deterioration in the Philippines’ near-term macroeconomic and fiscal outlook as a result of the impact of the global COVID-19 pandemic and domestic lockdown to contain the spread of the virus,” it said in a note sent to reporters on Thursday.

A stable outlook indicates that the country’s rating is likely to be maintained rather than lowered or upgraded in the medium- and long-term or over the next 18-24 months.

Despite the lower outlook, Finance Secretary Carlos G. Dominguez III said in a statement: “The Philippines is in a good fiscal position to deal with the unprecedented challenges posed by this contagion that has brought the global economy to the cusp of a recession.”

“The BSP’s long list of prompt and decisive policy support measures — including the cumulative 125 basis points (bps) cut in the policy rate and the 200 bps reduction in the reserve requirement ratio so far this year — shows that we have been putting our elbow room to good use,” BSP Governor Benjamin E. Diokno said in the same statement.

In February, Fitch Ratings upgraded the country’s credit rating outlook to “positive,” citing positive economic growth, healthy fiscal conditions and its aggressive infrastructure development drive.

Now, Fitch Ratings estimates the country’s gross domestic product (GDP) to contract by 1% in 2020, a sharp revision from the 6.4% forecast it gave last year.

This compares to the flat growth to 1% contraction projected by economic managers from an initial 6.5 to 7.5% growth target range before the virus hit the country.

“Fitch projects the economy will contract this year, and that fiscal relief measures will contribute to a widening of the 2020 general government deficit by more than 3.5 percentage points of GDP,” it said.

“Under our baseline, we assume a gradual economic recovery from Q320, and we expect growth of 7% in 2021,” it added.

In the first quarter, the country’s gross domestic product shrank by 0.2%, breaking 84 quarters of uninterrupted growth. This, after the economy grew by six percent in 2019, based on 2018 prices.

Despite the headwinds brought by the pandemic, Fitch said it kept the credit rating of the Philippines at “BBB” because of its sound economic position before the outbreak.

“The affirmation of the ‘BBB’ rating reflects the Philippines’ fiscal and external buffers, including its lower government debt/GDP ratio compared with peer medians and net external creditor position, as well as its still-strong medium-term growth prospects,” Fitch said.

The pandemic is expected to impact remittance inflows, which contribute about 8% to the GDP. Fitch said remittances will likely drop by 2.5% this year, as inflows from oil-sensitive Middle East countries accounts for 20% of total cash remittances in 2019.

“We also forecast tourism receipts, which account for 2.5% GDP, to contract by about 70% before beginning to recover gradually later in the year,” Fitch added.

The decline in both tourism receipts and remittances will spill over to the country’s current account, which may see a wider deficit of -1.6% in 2020 from the -0.2% seen in 2019, Fitch said.

“Exports are also projected to contract by about 2% on account of weak external demand. Sharply lower oil prices and lower import demand mitigate the impact on the current account,” it added.

BPOs face uncertain post-pandemic future

May 8, 2020 | 12:31 am

By Jenina P. Ibañez
Reporter

THE business process outsourcing (BPO) industry is looking at an uncertain future where large global corporations either re-shore jobs or diversify their outsourcing destinations in response to the impact of the novel coronavirus pandemic on business.

In the Philippines, the outsourcing industry is expected to lose clients to other countries with stronger internet infrastructure that can support work-from-home (WFH) programs.

“Different countries have handled the pandemic very differently, and some have suffered a lot more than others. So I think that will prompt some of the large companies to take a more balanced approach to their location strategy and perhaps not put all their eggs in one basket,” Matchboard Managing Director Sharon Melamed said in a Zoom interview. Matchboard is an Australia-based outsourcing matching service.

She said big companies in Australia understand the limitations of internet coverage in the Philippines.

“Unless that dramatically changes, they may look to have alternative destinations serving particularly premium customers where they just can’t afford to have long wait times and outages.”

Kristine A. Romano, McKinsey & Company Philippines Managing Partner, said contracts are at risk of being canceled as BPOs in the Philippines only have around 40% of their staff working from home. In India, she said, companies have 60-80% of their manpower working at home.

In addition to contracts being shifted to other countries, Ms. Romano said companies may also re-shore jobs.

“There will be a push from various governments to onshore jobs. For now, we’re seeing it’s mostly manufacturing jobs that are being incentivized to be onshored, but if the crisis deepens or worsens, that might lead to even services being onshored,” she added.

Alorica Asia President Rainiero “Bong” Borja said in a recent television interview that some US-based companies are already temporarily reshoring jobs, especially for sectors like e-commerce that now need strong online support. He expects outsourcing to bounce back, noting that the sector is working with local telecommunications companies to improve WFH connectivity.

The outsourcing industry recorded $24.8 billion in revenues and 1.23 million direct employees in 2018. The sector is a key driver of real estate development and household consumption, which in turn fuels nearly 70% of gross national product.

Ms. Romano said that the recovery of the Philippine outsourcing industry may not be as quick as it did after the 2008 global financial crisis.

“The unique thing about this time around will be because it’s so global… There is now a question, not just of offshoring and reducing costs and getting efficiency gains, but also about resilience. Because they won’t just want to offshore to one country given again the risk — if that country is on lockdown, then their operations will be disrupted. So there’s now an additional consideration on resilience,” she said.

Matchboard’s Ms. Melamed also said that data security may pose a problem for large companies wary of a WFH setup, but notes that some technologies have reduced contact center agents’ access to sensitive data.

Many companies, she said, are closing down amid fallout from the pandemic.

“Many Australian businesses are suffering and even collapsing… and this is inevitably causing a reduction of (outsourcing) headcount in the Philippines.”

LOWER TARGETS
Contact Center Association of the Philippines (CCAP) President Jojo Uligan in a virtual press conference said the call center industry will have to revisit the 4-5% revenue growth target set at the start of the year.

As the global tourism and hospitality industries face challenges and the online retail and logistics industries continue to grow, he said contact centers have been reassigning employees from lower to higher-demand sectors instead of cutting jobs.

“So far, we are not hearing any of our clients shutting down or bringing back the jobs in their geography,” Mr. Uligan said.

But CCAP, which has 123 member companies, also said that 30-35% of employees work from home, and up to 20% work on site.

CCAP Board Director Tonichi Parekh said the remaining employees often don’t have the infrastructure to allow them to work from home.

“During the first part of the lockdown, most of our member companies made sure that they were also taken care of,” she said, including providing 50% salaries for non-working employees.

Mr. Uligan said CCAP is working with telecommunications companies to address internet concerns.

“We give them all the data, the issues our people are getting while we implement work-at-home. Others, we provided them with WiFi or dongles for them to be able to operate.”

NEW MARKET: SMALL BUSINESSES
The Philippine outsourcing industry may, however, attract new demand as small businesses in other countries look to outsource jobs in order to cut costs.

“The focus will be on costs. When the world is in a recession, there’s a lot of focus on cost savings, and a more flexible work force and outsourcing is exactly that,” Outsource Accelerator Chief Executive Officer Derek Gallimore said in a phone interview.

Mr. Gallimore said demand had been plateauing in recent years as 90% of multinational companies are already outsourcing. But he said that the 40 million small and medium-sized enterprises (SME) in the “high-cost English speaking world” — with only 0.5% currently outsourcing — may soon begin to consider the service.

“This is going to be a huge demand for outsourcing in the future… Now, with globalization and technology and the tools, it’s easier and more accessible for SMEs.”

Real estate service provider Santos Knight Frank, Inc. had said that the Philippines’ competitive costs, including lower rent and operating costs, will be an opportunity for increased outsourcing.

Mr. Gallimore said sectors that can expect to see more activity, particularly e-commerce, food provision, government, health care, pharmaceuticals, logistics, video conferencing, and entertainment streaming.

To do this, the Philippine outsourcing industry needs a public relations boost, the industry professionals said.

“The Philippines needs to position its outsourcing services to be the high-quality, professionalized outsourcing services,” Mr. Gallimore said.

Matchboard’s Ms. Melamed said the Philippines must improve its internet infrastructure, as well promote their services to businesses that are cutting costs.

“Come out with educational blogs, e-mail outreach and being very proactive at this time — telling businesses that they can help their business survive and thrive and get through this,” she said.

Rey C. Untal, chief executive officer and president of the Information Technology Business Process Association of the Philippines (IBPAP), said in an e-mail that the industry can gradually shift to a “new normal.”

“As should be expected, this will mean the widespread adoption of new practices that were, to a certain degree, underutilized prior to the COVID-19 pandemic. This includes the extensive use of tools like Zoom, Microsoft Teams, Hangouts, and Webex. We also anticipate seeing more businesses and employers initiating and implementing blended WFH (work-from-home) and on-site operations.”

He said reshaping the industry will require multi-agency and multi-industry cooperation “to ensure our country’s continuing relevance in the global marketplace despite and amid the challenges.”

The Department of Information and Communications Technology recently said it will work to make internet connectivity faster and cheaper after the lockdown is lifted, encouraging smaller telecommunications and cable TV operators in the provinces to connect homes to the internet.

AUTOMATION BUNDLES
The outsourcing industry is not new to questions about the risks that automation poses to contact center jobs.

“Being able to speak good English, especially for the Philippines, is no longer a big advantage because now we have chatbots which can do the work faster with lower cost,” Advance.AI Co-founder and Chief Operating Officer Dong Shou said in a Zoom interview.

He said Philippine BPOs must urgently upskill workers.

“Train workers to work with AI (artificial intelligence) systems to get them familiar with these kinds of technologies, some systems. Redeploy humans to higher value processes like data analysis and critical judgment… and leave this kind of repeated work to machines.”

Ms. Melamed, however, said that while other countries have a technological advantage, the Philippines has a unique opportunity to “bundle” both technology and talent.

“A BPO might be able to say ‘pay us per customer under management, and we’ll include in there not only all the people-side but all the technology-side.’ So bundling everything together…because the competition is really huge on both fronts,” she said.

“The Philippine BPO industry has been the admiration of so many countries in its ability to recruit and train huge numbers of people at lightning speed, and the opportunity is now to extend this into the automation sector as well.”

Diokno: Current policy rate remains ‘appropriate’

May 8, 2020 | 12:30 am

THE aggressive policy easing fired off by the central bank this year will be “appropriate” as the economy faces challenges brought by the coronavirus disease 2019 (COVID-19) pandemic, according to Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno.

“With the manageable inflation environment and stable inflation expectations, we believe that the 125-basis-point (bp) cumulative cut in the policy rate this year is appropriate to buffer the country’s growth momentum and boost market confidence amid stronger headwinds,” Mr. Diokno said in an online briefing on Thursday.

The central bank already cut rates thrice this year — a 25-bp cut in February followed by 50-bp reductions in March and April.

This brought benchmark rates to record lows of 2.75% for the overnight reverse repurchase facility and 3.25% and 2.25% for the overnight lending and deposit facilities, respectively.

Mr. Diokno has said they will assess how banks have responded to their easing moves and regulatory relief measures for their next monetary policy assessment.

The next rate-setting meeting is scheduled on June 25 as the Monetary Board has called off its May 21 meeting following the off-cycle 50-bp cut on April 16.

Meanwhile, Mr. Diokno said the reduction in banks’ reserve requirement ratios (RRR) as well as the alternative modes of compliance with the RRR are meant to encourage lending to sectors affected by the pandemic, including the micro-, small- and medium-sized enterprises (MSMEs).

Asked how banks have used the liquidity boost coming from the cuts in policy rates and RRR, Mr. Diokno said: “Monetary policy works with a lag. Nothing will happen overnight.”

“There’s a lag of about three quarters as far as historical numbers show. But there’s some movement already,” he said.

“I think more money is going into GS (government securities), some money is going into lending. Let’s not get too impatient, I think we’ll get there,” he said.

This was echoed by BSP Monetary Policy Sub-sector Officer-In-Charge Dennis D. Lapid, who said the liquidity freed by the central bank’s easing “works in different channels.”

“[It’s] not just bank lending channels. There’s a lot more short-term liquidity in the market,” Mr. Lapid said.

Latest BSP data showed bank lending in February grew by 12.2%, quicker than the 11.2% logged in January.

The Monetary Board slashed the RRR of universal and commercial banks by 200 bps to 12% effective April in a bid to boost liquidity during the Luzon lockdown.

Meanwhile, the RRR of thrift and rural banks are at four and three percent, respectively. Liquidity boost for smaller banks came through the 400-bp reduction in the minimum liquidity ratio for stand-alone thrift and rural banks to 16% until end-2020.

Mr. Diokno added that his promise to reduce big banks’ RRR to the single-digit level may come “earlier” than his 2023 goal.

“A” RATING GOAL TO TAKE A BACKSEAT
As the ongoing COVID-19 outbreak takes its toll on the economy, Mr. Diokno said the country’s ambition to get an “A” rating from debt watchers may have to be set aside for now as government efforts should be focused on people during this crisis.

“This pandemic hit the Philippines when we were on a roll. The road to ‘A’ might take a backseat at the moment,” the central bank chief said. “Our concern right now is to help our people rather than pursuing our Road to ‘A’.”

“We are going to borrow money. Fortunately for us, we start from a low debt-to-GDP (gross domestic product) ratio,” Mr. Diokno said.

“Achieving it (A rating) by 2022 may or may not happen. But as I said we are focused on appropriate policies and necessary reforms to put the economy back into its growth trajectory…,” he added.

The country’s debt-to-GDP ratio last year was revised to 39.6% using 2018 as the base year, after the indicator was initially at 41.5%. Economic managers have set a 46.7% debt-to-GDP target this year.

Ahead of the virus outbreak, the government was hoping to obtain an “A” sovereign rating from credit raters by 2022 as the country was expected to become an upper middle-income country by this year.

The Philippines’ sovereign credit ratings were upgraded to the minimum investment grade by S&P Global Ratings, Fitch Ratings and Moody’s Investors Service in 2013. Since then, the debt watchers have raised their ratings to a notch above minimum, putting the country closer to achieving an A-level grade. — Luz Wendy T. Noble

Oro, Plata, Mata director Peque Gallaga, 76

May 8, 2020 | 12:11 am

“I want to be remembered the way Mars Ravelo is remembered.”

— Peque Gallaga speaking to High Life in 2015

By Sam L. Marcelo, Associate Editor

PEQUE Gallaga, the multi-awarded director best known for Scorpio Nights (1982) and Oro, Plata, Mata (1985), died on May 7 due to complications arising from past health conditions. He was 76. The Gallaga family announced his passing on social media. “He was a visionary director and artist; a loving husband, father, and grandfather, and a dear friend. He has brought so much joy to so many people and he will always live in our memories and in his art,” the statement read.

Maurice Ruiz de Luzuriaga Gallaga was born on Aug. 25, 1943, in Bacolod City, Negros Occidental. His home province featured heavily in Oro, Plata, Mata (1982), a three-hour epic portraying the fate of two haciendero families caught up in the violence of World War II. Considered his most important contribution to Philippine cinema, Oro, Plata, Mata won six Gawad Urian Awards, including Best Direction. It was also nominated for the Golden Hugo Award for Best Feature in the Chicago International Film Festival (1983); an Award for Best Direction from the International Film Festival of Flander-Ghent, Belgium (1983); and a Special Jury Award from the Manila International Film Festival (also in 1983).

Gallaga recruited several members of Champoy, a 1980s TV sketch comedy show that he also directed, to star in what would become his masterpiece: Mitch Valdez; Joel Torre, who, before Oro, was a production assistant on Champoy; and Cherie Gil, who also starred as a washed-up opera singer in Gallaga’s Sonata (2013) — written by Gallaga’s youngest son, Wanggo — and in the yet-to-be-released Magikland.

Gallaga cemented his reputation as an auteur with Scorpio Nights (1985), an erotic thriller that became the talk of the town for its explicit sex scenes. Critics celebrated Scorpio Nights for elevating titillation to high art, an act they interpreted as defiance against the Marcos regime.

It was also this film that birthed a professional partnership that would last Gallaga’s lifetime:

On Dec. 4, 1984, shortly after dress rehearsals for a Tessie Tomas dinner comedy, Gallaga suffered a heart attack and had to be confined in a hospital. Five weeks later, prior to being officially discharged, Gallaga left the hospital to start filming what would become the notorious Scorpio Nights.

The film’s production manager was Lore Reyes, serving Gallaga for the second time in that capacity. (The first time was on Virgin Forest, a period drama set in 1900 starring the late Miguel Rodriguez and Sarsi Emmanuel.) It was because he was in bad physical shape that Gallaga began thinking of asking someone to co-direct future films with him. “I looked for a partner primarily for help with the physicality of making a movie. I was a cripple and I couldn’t stay awake for 24 hours straight like I used to,” he says. Gallaga approached two close collaborators during the Scorpio Nights shoot — Don Escudero (who passed away in 2011) and Uro de la Cruz — both of whom turned him down.

(“The unsung, ignored half of the Gallaga-Reyes movies,” High Life, September 2015)

With Reyes as his co-director, Gallaga embarked on the second phase of his career, which consisted of horror films and children’s cinema: Shake, Rattle & Roll 2 (1989), deemed among the best in the franchise; Tiyanak (1988), whose catchphrase “Ayan na ang anak ni Janice!” entered the lexicon of Philippine pop culture; Batang X (1995), the science-fiction hit that spawned a pair of TV series as well as a comic book series; Magic Temple (1996), which was nominated for 14 awards at the 1996 Metro Manila Film Festival and won all of them, including the best director nod for Gallaga and Reyes; and Magic Kingdom (1997), which gave us Anne Curtis.

“I want to be remembered the way Mars Ravelo is remembered,” Gallaga told High Life in an interview in 2015. “Our work, especially on Philippine lower mythology, is in the consciousness of our people, and it’s not a Hollywood consciousness. Lore and I have somewhat affected Philippine consciousness on a cultural level, hopefully like Ravelo. And in the case of fantasy and horror, the fact that we captured something more atavistic of the Filipino soul is something really important that I don’t think the critics or those who write about Philippine Cinema have acknowledged.”

Ravelo (1916-1988) was a Filipino comic book cartoonist and graphic novelist who created Darna, Dyesebel, and Captain Barbell.

In 2015, Gallaga shared yet another part of his creative life when he held his first solo exhibition at Art Verite Gallery. Titled Gray Matters, Gallaga’s debut as a visual artist — at the age of 72 — consisted of pencil drawings of Negrense youth. He followed this up in 2017 with Gray Locutions, another suite of drawings meditating on the youth of his home province.

Gallaga, with his glasses and his snow-white beard and flowing mane, was expansive in both presence and personality. On the morning of his death, a message from Gallaga’s wife of 52 years, Madeleine “Madie” Gallaga, circulated among the director’s friends and colleagues: “His body has completely broken down. The doctors can’t do anything more but make sure that he is comfortable and not in pain. … I know he’s ready and willing. But we also know that the body will hold on until the motor finally dies.” Later that day, the motor did, allowing the 76-year-old giant of Philippine cinema to rest.

Saying goodbye to Peque Gallaga

May 8, 2020 | 12:10 am

FILM director Peque Gallaga, the man behind Oro, Plata, Mata (1985), Magic Temple (1996), and Scorpio Nights (1985) among many other well-known and well-loved Filipino films, passed away at the age of 76 in a Bacolod City hospital. Upon the announcement of his death, an outpouring of tributes were posted on social media from colleagues and friends. Here are some of them.

KIP OEBANDA, FILM DIRECTOR (VIA TWITTER)
We lost one of the greatest of all time. No one influenced my love for local cinema more than Peque Gallaga. RIP, sir. Your legacy as an artist and as a person will live on.

ZSAZSA PADILLA, SINGER/ACTRESS (VIA TWITTER)
Alongside an old photo of Mr. Gallaga, Ms. Padilla wrote, “From Hiwaga Sa Balete Drive. Took his photo while he was giving me instructions for one scene. Maraming salamat, Peque Gallaga.”

NINOTCHKA ROSCA, AUTHOR (VIA FACEBOOK)
He wouldn’t mind now but this was how I met Peque Gallaga. On the day martial law was imposed, Sylvia Mayuga called him to house me and a companion as the place we were in was an address compromised. Hence we journeyed to his house in a gated community where we could stay as we made plans for what to do next. He was very upset about martial law. So he brought out weed and a bong pipe. I declined, thinking, gee, I’ll be arrested, not for politics but drugs, LOL. He said JPE [Juan Ponce Enrile] lived just the next block and could be seen in the street in the morning jogging. But the point of this tale was that it was this way during Marcos time: one was willing to take in strangers to shield them from the state. We were larger then than simple survival. And never forgot a debt of gratitude. Go in peace and forever hosannas, Peque.

LIZA DINO-SEGUERRA, CHAIRPERSON OF THE FILM DEVELOPMENT COUNCIL OF THE PHILIPPINES (VIA FACEBOOK)
Inaabangan ng lahat ang pagbabalik-pelikula ninyo through Magikland… and it’s sad to find out na hindi ka na namin makakasama. I never had the chance to work with you but in the times we got to talk, napakabait nyo po sa akin. I will never forget it. Salamat, Direk Peque. You were more than a great director, but a true legend and mentor to this industry. You can rest now.

ICE SEGUERRA, SINGER/ACTOR (VIA FACEBOOK)
Maswerte ako, Direk Peque, kasi naging director kita. You and Direk Lore [Reyes] have taught me so much about our craft, mas natuto ako maging disiplinado and to take my work seriously. Mahal kita, Direk. Pahinga ka na po.

KEITH SICAT, FILM EDITOR (VIA FACEBOOK)
I’m heartbroken about the news of Direk Peque’s passing. He was as wonderful as you could ever wish a hero to be. I loved hearing his behind-the-scenes stories and very much sought his counsel — his wisdom always shining a light on a once-obscure path. I thank the universe for giving me the privilege to have gotten to know you a little bit in this world. May God be walking alongside you now while you watch over the rest of us. I love you and miss you.

BIBETH ORTEZA, ACTRESS/WRITER/DIRECTOR (VIA FACEBOOK)
In the hospital, soon after my mastectomy [in] November of 2004, I got this text from him: “You know for the longest period I’ve been an atheist. But I am now making my piece with God and praying for your healing.” I will miss you, dearest Bakunawa!

ANTOINETTE JADAONE, WRITER/DIRECTOR (VIA FACEBOOK)
Namaalam na si direk Peque Gallaga. I only knew him before for his Magic Temple (saulo ko ang kanta: Buto kalansay tabi-tabi po sa bangkay) and Batang X (saulo ko rin ang theme song: Batang isinilang sa mundo naguluhan, batang di pinapansin ng mga magulang, bulag nakakakita, pilay lumilipad!) and then I went to film school and watched the cinematic masterpiece that is Oro, Plata, Mata that left me in awe (oh wow what a privilege to have seen that film, thank you direk Peque). Years later, as I was doing research for my first film Six Degrees, I would contact him (he and direk Lore discovered Nanay Lilia on their horror film set) through Ate Jo — hindi ko sila kilala pareho pero kinapalan ko na ang mukha ko. Ate Jo told me direk Peque wanted to talk to me on the phone — and he said yes. My god, I was talking to direk Peque Gallage on the phone — kung pwede ko lang ipa-frame ang moment na ‘yun.

My [director of photography] Sol and I flew to Bacolod to interview direk Peque and actually shoot his scenes for my mockumentary. Starstruck na naman ako sa bahay niya. Kung umikot yung ulo at mata ko kala mo National Museum napuntahan ko. I was 26 or 27 then, and there I was, inside the house of the Oro, Plata, Mata director. Ang galing na artista ni direk Peque! Kung napanood n’yo ‘yung pelikula, scripted ‘yun pero parang hindi! My interview with him was what became the framework of my screenplay. I owe a lot to him. I still remember my favorite lines he said in my film: “But the reason we make movies is not because of the awards. The reason why we make movies is because we love making movies.”

I sent him a link to Six Degrees and when he saw it, he called me and said encouraging, beautiful words that will inspire me for the rest of my life. That was what direk Peque has been to me since then. An idol who I can reach with my hands because he was so generous to share what he knows. An idol who actually believed in me when I was just doing my first film! I would occasionally message him during decision-making moments of my life, and his words will always be full of wisdom. Of course, he didn’t forget to tell me when he didn’t like a movie I made. Balanse lang and I appreciated that.

Years later, Irene and I would cast him in Relaks, It’s Just Pag-ibig at nung magpi-picture na kami, naiyak si Irene sa upuan eh. I guess that’s really how overwhelming direk Peque’s presence is. Parang may dala siyang malaking Philippine Cinema na kapa tapos kukurutin mo sarili mo, Verum est? Totoo ba ito?

Binabalik-balikan ko pa rin ang e-mails at messages ni direk Peque sa akin sa mga panahong kailangan ko ng tulak. MARAMING, MARAMING SALAMAT, DIREK PEQUE. Mula sa isang fan-turned-forever fan. Your memory lives with us. There will never be another.

ANNE CURTIS-SMITH, ACTRESS (VIA FACEBOOK)
I will forever be grateful to him and Direk Lore for choosing me to be their Princess Dahlia. It breaks my heart knowing that he won’t get to meet my own little Dahlia. Direk Peque, thank you for giving me a role that would change my life forever. I will miss you and will treasure the memories and lessons you taught me in the craft of acting. Rest In Peace Nelson Bakunawa I love you.

JOAQUIN PEDRO VALDES, ACTOR (VIA FACEBOOK)
Absolutely gutted. I owe a lot of myself as a filmmaker and artist to the works and the artistic sobriety of Direk Peque. He was the only one in the biz that called bullshit out straight and was always truthful in his process. He was unfazed by the glitz of show business and was just a downright genius. And boy did he have real taste and class. Goodnight Direk, thank you for all the Horror, Fantasy, and Adventures you left us with. In your sleep, may you chance upon more vivid dreams. Paalam Nelson Bakunawa.

WFH during ECQ: Salcedo Auctions’ Richie Lerma

May 8, 2020 | 12:09 am

AUCTION houses, much as art fairs and galleries, are now selling and exhibiting online, having made a total shift to digital platforms during the quarantine period.

Salcedo Auctions director Ramon “Richie” Lerma observed that their staff remain focused while working from home despite the lack of face-to-face interaction.

“Nothing can, of course, compare to in-person contact when meeting or providing feedback, particularly to our creative staff. I haven’t really felt a big change in terms of productivity — in fact sometimes I feel that we are able to do more given that people can focus more on their work while in lockdown (laughs),” Mr. Lerma wrote in an e-mail to BusinessWorld.

On April 18, Salcedo Auctions held its first benefit online auction since the enhanced community quarantine (ECQ) was imposed, selling Romulo Galicano’s painting The Wrath of God for P4 million. A second benefit online auction under Salcedo Auctions’ subsidiary Gavel&Block will be held on May 23 at 2 p.m. Proceeds from the first auction went to the purchase of personal protective equipment for hospitals around the country. Money raised in the upcoming auction will benefit the international food relief organization Rise Against Hunger (RAH) Philippines.

Mr. Lerma noted that everyone in the team “is coping with the situation as best as they can.”

Here’s how Mr. Lerma has been working from home over the past few weeks.

WHERE IS YOUR HOME OFFICE?
I have a home office set up inside the bedroom, but I hardly use it. My family loves to hang out in the kitchen, so my “home office” right now is the dining table adjacent to it.

WHAT IS YOUR PREFERRED MEETING METHOD AND WHY?
I like Zoom, particularly because of the many functionalities of the platform. Our recently concluded Gavel&Block #WeBidAsOne community call was a nice way to introduce a new way for people in the art and community to gather in a convivial online setting. We received good feedback from it, and hope to do more as we deal with the COVID-19 situation.

WHAT TIME DO YOU START YOUR DAY FOR WORK? IS IT EARLIER OR LATER THAN YOUR USUAL SCHEDULE? WHAT TIME DO YOU END?

We maintain our usual work-week schedule even while working from home, so I’m usually online — on my laptop or on the phone — with my staff starting at 9 a.m. Unofficially, we end the day at 6 p.m., but it usually goes beyond that time.

DO YOU TAKE BREAKS?
Yes, certainly! [Watching] Netflix. [Doing a bit of] cooking, or tasting [my wife] Karen’s cooking is a great respite from work.

DO YOU STILL DRESS UP FOR WORK OR HAVE YOU SWITCHED TO A MORE CASUAL ATTIRE?
I’m in my home lounge attire [on] most days, so I’m usually off-cam with the staff. On those days where work necessitates needing to be on-cam, then I dress appropriately.

WHAT DIFFICULTIES OR CHALLENGES DID YOU EXPERIENCE? ANY DISTRACTIONS?
Fortunately, we have not had much difficulty work-wise transitioning to operating online during this period. Luckily, our sons have their own private spaces where they can attend school online, so there has not been any distraction.

WHAT IS THE MOST IMPORTANT LESSON YOU HAVE LEARNED FROM WORKING FROM HOME?
The new work arrangements we have put in place as a response to the ECQ allowed us to reassess our operational requirements as well as the responsibilities that we delegated to our staff. A number of them were deployed to take on new tasks, which gave them the opportunity to show their added capabilities. Their resilience throughout this situation, for which I must commend them — has enabled us to continue to be productive. It’s not so much a lesson, but rather a reassurance that I’ve gleaned from this experience about the quality of our staff, and the immense trust that our organization has built over the past 10 years seeing the community‘s enthusiastic response to our auction and exhibition programs, which continue with enthusiastic resolve, and a deep commitment to society and its future. — Michelle Anne P. Soliman

ABS-CBN moves to block NTC order

May 8, 2020 | 12:08 am

By Vann Marlo M. Villegas, Reporter

ABS-CBN Corp. asked the Supreme Court to stop the implementation of the National Telecommunication Commission’s cease-and-desist order to halt its operations due to franchise expiration.

The network filed a petition for issuance of a temporary restraining order and/or writ of preliminary injunction, two days after it went off air on May 5 following the order of the NTC (National Telecommunication Commission) due to the expiration of its franchise on May 4.

In a 46-page petition, ABS-CBN said the NTC committed grave abuse of discretion “amounting to lack of jurisdiction” when it issued the cease and desist order.

It said the telecommunications regulator should have deferred to the Congress, which approves franchise renewals, and allowed ABS-CBN to continue airing on radio and television.

There are 11 House Bills and two Senate Bills filed for the renewal of the company’s franchise.

“The NTC’s failure to consider all these factors amounts to a capricious and whimsical exercise of discretion in the issuance of the CDO,” ABS-SCBN said. “The NTC merely relied on the supposedly expired legislative franchise of ABS-CBN without regard to the attendant circumstances.”

The NTC in March said in a hearing that it would issue provisional authority to ABS-CBN, following the position of the Department of Justice that the Congress could authorize it to allow the operation of ABS-CBN while its franchise renewal is pending.

The House of Representatives sent a letter to the NTC and the Senate passed a resolution mandating the commission to issue provisional authority to ABS-CBN.

“The NTC’s bad faith, malice, and underhandedness are simply shocking and abhorrent,” the network said.

RIGHTS VIOLATED
ABS-CBN also said the cease-and-desist order violated its right to equal protection as it deviated from past practice.

It noted that it has been a “settled practice” of the NTC to allow broadcasting entities to continue operation pending the renewal or extension of the franchise.

ABS-CBN cited five instances where the NTC allowed broadcasting networks to go on air while their franchises expired and are awaiting their approval of the Congress.

“There is no reason why the same practice should not be applied to ABS-CBN,” it said.

“The fact that the OSG (Office of the Solicitor General) has filed a petition for quo warranto before this Honorable Court does not create any real difference or distinction which would justify a different treatment,” it said.

The company said the order against it is in the nature of preliminary injunction, and it should have been issued “upon notice and after hearing, and requisites for preliminary injunction must have been met,” violating its right to due process.

ABS-CBN also argued that there is no urgency for the issuance of the cease-and-desist order and the closure “will cause serious and irreparable damage” to public interest as well.

“ABS-CBN has more than 11,000 employees. The closure of ABS-CBN will jeopardize the livelihood not only of such employees, but also of their families,” it said.

The government will also be deprived of a “significant source of tax revenues” as from 2016 to 2019 the network paid tax of at least P14.3 billion.

The shutdown order also amounts to “limitation if not curtailment of the freedom of speech and of the press with prior restraint.”

ABS-CBN also filed an urgent motion for the raffling of its petition, as its operations is “a matter of public interest and transcendental importance” as one of the largest broadcasting networks in terms of coverage and audience.

10 artists, 10 songs mark Upstart’s 10 years in fundraising online concert

May 8, 2020 | 12:08 am

IN line with its 10^th anniversary, the theater group Upstart Productions presents Upstart 10 for 10, an online mini-concert fundraiser on May 9, 8 p.mat its Facebook page.

Upstart 10 for 10 will feature 10 artists namely Topper Fabregas, Rony Fortich, Jenny Jamora, Carla Guevara-Laforteza, Lorenz Martinez, Shiela Valderrama-Martinez, Jill Pena, Felix Rivera, Ice Seguerra, and Reuben Uy.

The show’s repertoire will include 10 songs from Upstart Productions’ first musical, Breakups & Breakdowns by Joel Trinidad and Rony Fortich.

The show is part of the Open House series of shows which aim to solicit donations for the benefit of the theater professionals behind the scenes — stage managers, prop masters, dressers, set builders, and the unsung heroes, who have lost their means of livelihood during this current pandemic.

The show will be on FB Live on Upstart’s page https://m.facebook.com/upstartproductionsinc/

To support the project and donate, visit bit.ly/Upstart10for10.

PLDT studies budget cut to P63B

May 8, 2020 | 12:07 am

By Arjay L. Balinbin, Reporter

PLDT Inc. (PLDT) is looking at reducing its capital spending for this year by 24% to P63 billion from the planned P83 billion as movement and travel restrictions under the government-imposed enhanced community quarantine (ECQ) hamper its network rollout.

The Pangilinan-led company also reported on Thursday that its first-quarter net income had decreased 12% to P5.91 billion because of losses on its investment in German-based Internet company Rocket Internet and ramped-up investment in its digital arm Voyager Innovations, Inc.

“Our capex (capital expenditures) is likely to decline by 20 to 25%. Our best estimate as of now is that from P83 billion, it will probably drop to around P63 billion for the year unless, of course, we regain much of the momentum lost during this ECQ,” PLDT Chairman and Chief Executive Officer Manuel V. Pangilinan said during a virtual press briefing on Thursday.

PLDT Chief Finance Officer Anabelle L. Chua said the ECQ restrictions could lead to the spending adjustment.

“Our network rollout activities have been constrained by the reduced mobility of our network teams since the ECQ was imposed in mid-March,” she said.

In a disclosure to the stock exchange, PLDT said its first-quarter net income dropped 12% from P7.2 billion a year ago.

PLDT’s core income was also down 5% to P6.9 billion from P7.20 billion.

Total revenues went up 7% to P43.65 billion, of which service revenues increased 8% to P41.8 billion and non-service revenues inched up 1.25% to P1.85 billion.

By business segment, PLDT Home revenues grew 23% to P9.6 billion while revenues of the Individual segment soared 49% to P20.2 billion. The Enterprise group recorded P10.1 billion in revenues, up 24%.

Data and broadband saw revenues rise 19% to P29.3 billion as of end-March. PLDT said data contribution to service revenues grew to 71% in the first quarter.

“For most of the first three months of 2020, the Wireless Consumer business maintained its forward momentum in top-ups, driven by greater adoption of data among its subscribers and higher usage by existing data users,” PLDT said.

“Mobile data usage continued to be driven by customer demand for video, social media services, and mobile games delivered to prepaid subscribers through various GIGA load packages. When the lockdown came along, this was augmented by customers using various work collaboration apps conveniently bundled in a new service offer called GIGA Work,” it added.

The company said the bulk of its capex this year will go to connectivity, which includes fiber to the home, home WiFi and mobile.

It will also focus on upgrading IT systems since many businesses and individual consumers have been moving to online activities.

As for his outlook for the second quarter, Mr. Pangilinan said: “The revenue for the second quarter will likely show a decline of low to middle single digits compared to the first quarter revenues this year. But compared to the first quarter last year, it is likely that it will show growth.”

“The first half of this year will also be ahead of the first half of last year in terms of revenue,” he added.

Shares in PLDT went down by P48 or 3.76% to close at P1,227 apiece.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls.

Saith the Lord

May 8, 2020 | 12:07 am

MOVIE REVIEW
Venganza (Vengeance, 1958)
Directed by Manuel Conde
Available on Mike de Leon’s
Citizen Jake Vimeo site

PRECIOUS little has been written online or on print about Manuel Conde save a book by Nicanor Tiongson (which I haven’t been able to read, unfortunately, and is currently unavailable). The filmmaker is best known for his comic Juan Tamad (Lazy John) film series, and for writing, producing, directing a small scale biopic on Genghis Khan that depicted the eponymous Mongol prince (also played by Conde) as an ambitious, charmingly inventive runt — the film competed in the 1952 Venice International Film Festival, the first ever Filipino film to do so.

Venganza (Vengeance, 1958) which Mike de Leon has made available on his Vimeo website (sans subtitles, alas) isn’t as well-known and isn’t the Conde we are familiar with: a straightforward drama about the peaceful Simoun’s (Mario Montenegro) vow of revenge when bandits led by Martinico (Eusebio Gomez) and Peklat (Scar, played by the always memorable Joseph Cordova) terrorize his village and cause the death of his newly wedded wife Pilar (Perla Bautista).

Martinico is the ostensible villain and a rotten dastard to the core but Simoun’s true adversary is in my book the officiating priest (and Pilar’s brother), Padre Roman (Carlos Padilla, Jr.). As the village’s religious leader, Roman is a force to reckon with; the folk bow and defer to his judgment and while he couldn’t keep the bandits from raiding Simoun’s wedding, he does manage to check the bandits’ (and Simoun’s) more violent instincts.

Padre Roman can’t stop the worst from happening but that doesn’t stop him from attempting to stop worse from happening: when Simoun takes on the dark portentous glower that is apparently the Montenegro trademark (we saw that same expression in Avellana’s earlier Lapu-Lapu) he doesn’t hesitate to remind Simoun that only God has the right to judge and mete out punishment; later when they see each other again Roman doesn’t hold back in condemning Simoun’s intention of using Martinico’s new bride against the bandit, recruiting an entire village of Igorots to help in his scheme. Roman is a common figure in Filipino films, the indomitable parish priest, who glides through many a Filipino melodrama insisting on the infallibility of church dogma, on occasion (not very often) pausing to help the protagonist in some small way (maybe one of the more interesting variations on this figure I’ve seen was in — again Avellana, but I was taking a dive into his filmography at the time — Anak Dalita, where Vic Silayan’s Father Fidel plays a [probably unintentional] ambiguous role, working with both hero and villain and deftly prevaricating on the moral issues).

Here Roman stands firmly on the side of God with regards to vengeance, and he comes off as dull and self-righteous. You wonder if the effect isn’t deliberate: Simoun’s bloodthirst is so much more compelling, not to mention sexy, that you tend to tune Roman out (so does Simoun, who at this point can’t really hear much beyond the pulsebeat in his ear); later, when Simoun is further along his plot and his treatment of the aforementioned bride seems cool if not downright sinister, Roman’s words feel more reasonable and we’re readier to listen. The two men represent familiar tropes in the standard-issue revenge drama; what I think Conde brings to the genre is an evolving, surprisingly nuanced (if ultimately conventional) view of both men and their positions on revenge.

Conde directs with assurance and grace; like Avellana he keeps a tight rein on his camera, bringing out his visual virtuosity only when called for. The wedding party from the bandits’ entry to their ultimate demands is a marvel of escalating tension: Peklat points his gun at the band and demand they play a tango, and from the musicians’ reluctance and the villagers’ shocked expressions you know this is a genuinely scandalous moment; Peklat delivers a satirical speech (a parody of hurt feelings because the villagers hadn’t invited them to the party) and watching the tense glances between Simoun, Ramon, and Pilar, you know they know how much danger they’re in. Later we see Simoun standing by the grave with a black band round his left arm; the camera pans down to his shoes, dissolves to later, and we see the same shoes and armband, only Simoun is seated. Time has passed and Simoun has taken the weight off his feet but little else has changed: he still mourns Pilar, still wants to exact bloody justice.

Simoun stalks Peklat, who leads a band of men delivering Martinico’s bride; when he improvises a delayed-action device and sets it off, the bride’s head jerks up to the camera and we see the visage of Carmencita Abad — startlingly beautiful, faintly Chinese — for the first time (we never really notice Conde concealing her face because the director never makes a big deal of it; the reveal is a nice shock effect). When Martinico has his enemies bound and helpless around him, Simoun deftly uses the one subject he’s familiar with — a man’s thirst for revenge — to force a one-on-one duel with the bandit leader, a genuinely tense confrontation using itaks, or short swords with blades weighted at the end to lop off tree branches or human limbs (Gomez swings his in wide circles like a helicopter blade; Montenegro keeps his pointed matter-of-factedly forward; Conde uses medium shots and long takes, the better to see the action and the combatants’ skill with blades). Simoun’s gambit is a clever comment on the tunnel-vision nature of vengeance — that a more mentally nimble opponent can use your single-mindedness against you — though of course Roman has to step in at the last minute to deliver the last word on the subject. A surprisingly engaging film, from a master Filipino filmmaker.

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