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SEIPI seeking clarity on logistics curbs

ELECTRONICS EXPORTERS asked for movement restrictions on people and cargo to be eased, with companies also starting to plan to move some production out of the Philippines until the logistics situation clears up.

Semiconductors and Electronics Industries in the Philippines Incorporated (SEIPI) President Danilo C. Lachica added in a mobile message Tuesday that he supports the finance department’s appeal to banks not to increase interest rates on loans as businesses struggle to deal with the impact of the coronavirus disease 2019 (COVID-19) outbreak and lockdown.

“Other ideas would be to extend the due dates on business loans and financial assistance to qualified companies which are at risk if the pandemic lasts longer,” he said, noting that the industry is facing an order backlog especially for medical electronics.

He told ANC Tuesday that many SEIPI companies produce integrated circuits and other components for equipment that help address COVID-19, including ventilators and diagnostic equipment.

Mr. Lachica said in the mobile message that there is too much uncertainty on when the pandemic will be controlled.

“Some companies have thought of moving volumes out of the Philippines. I hope we get these back after normal manufacturing resumes. Companies and employees need lifelines to survive and recover,” he said.

He said SEIPI also supports the transition from an enhanced community quarantine (ECQ) in Luzon to a modified community quarantine, based on suggestions from Presidential Adviser (PA) for Entrepreneurship Jose Ma. A. Concepcion III.

Under ECQ, export-oriented businesses may continue operations but with a minimal workforce provided with accommodations.

“We support PA Concepcion’s suggestion to allow manufacturers to resume operations once we have confidence that the COVID case curve has flattened. We still need to ensure that our workers are safe, but we need to improve cargo and people movement,” Mr. Lachica said, adding that he supports 100% or as many employees as possible to be allowed to come to work.

SEIPI is looking for demand-driven resumption of manufacturing that simultaneously ensures the safety of workers, free movement of cargo and consistent implementation of guidelines among local government, and the removal of checkpoints.

“Remove the checkpoints but focus on consistent testing and monitoring (at) Barangay level,” Mr. Lachica said. — Jenina P. Ibañez

Manila ports choked by unclaimed cargo, shutdown looms

THE Philippine Ports Authority (PPA) said Tuesday that cargo congestion at the Manila ports due to failure to withdraw cargoes may cause the terminals to shut down.

PPA General Manager Jay Daniel R. Santiago said in a statement that the shutdown of Manila port terminals is possible if cargo owners and consignees do not heed the agency’s request to immediately remove their ready-for-delivery and overstaying cargoes.

“Despite efforts to transfer cleared and overstaying containers from the Manila International Container Terminal (MICT) to a facility inside the Manila North Harbor, there is still not enough breathing space for the Manila port terminals to operate efficiently and productively,” PPA said in a statement.

It noted that yard utilization at the Manila international ports, composed of the MICT and the Manila South Harbor is near capacity as most cargoes “remained idle after the implementation of the Community Quarantine some two weeks ago.”

Mr. Santiago said: “Ports, specifically the Manila ports, are the lungs of the country’s commerce and trade. These lungs right now are not functioning efficiently due to congestion.”

“If we continue to ignore calls to withdraw even only those cleared, ready for delivery, and overstaying cargoes, these lungs are in danger of total collapse, resulting in full-blown port congestion, or worse, a shutdown, and consequently a shortage in the much-needed goods and supplies which are expected to address the demands of the market,” he added.

On Friday, International Container Terminal Services, Inc. (ICTSI) appealed to its consignees to withdraw their refrigerated containers immediately.

ICTSI offered an option for businesses that are unable to take delivery at their own facilities.

“Please utilize our offsite facilities in Laguna, Bulacan, or Cavite. Special accommodations are available for anyone who utilizes these facilities,” it said.

The Transportation department said ICTSI has also appealed to the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID) to facilitate the immediate approval of transfer or condemnation of a number of items through the Bureau of Customs.

These include more than 7,000 Twenty-foot equivalent (TEU) containers in the yard more than 30 days and more than 5,400 TEUs worth of uncleared, overstaying boxes.

It said all cleared boxes in the yard more than 30 days old should have approvals facilitated for the transfer to external facilities without delay. — Arjay L. Balinbin

BIR suspends audits during emergency period

THE Bureau of Internal Revenue (BIR) has suspended audits due to the lockdown and plans to resume 60 days after the six-month state of emergency is lifted.

BIR Commissioner Caesar R. Dulay issued Revenue Memorandum Circular No. 34-2020 dated March 27, which also suspended the run time for the statute of limitations on assessing and collecting of taxes.

“The suspension of the running of the Statute of Limitations shall likewise apply with respect to the issuance and service of assessment notices, warrants and enforcement and/or collection of deficiency taxes,” according to the circular, published Tuesday.

“Under the law, the BIR has certain period only to issue a tax assessment, which is three years from date of filing of the return, and only has five years to initiate collection proceedings like filing a case in court,” Tax Management Association of the Philippines, Inc. (TMAP) President Romeo H. Duran said.

President Rodrigo R. Duterte earlier placed the entire country under a state of calamity and national emergency due to the coronavirus disease 2019 (COVID-19) outbreak.

Mr. Duran said the circular gives the BIR more time to audit taxpayers during the public health emergency.

Luzon has been placed under enhanced community quarantine until April 12 to contain the spread of the virus. — Beatrice M. Laforga

Inflation for poor households eases in February

INFLATION, as experienced by low-income households, eased in February, the Philippine Statistics Authority (PSA) said Tuesday.

The inflation rate for households in the bottom 30% income range was 2.2% in February, less than the 2.3% recorded in January and the year-earlier 4.3%.

Headline inflation was 2.6% in February, which slowed from the 2.9% recorded in January and the year-earlier 3.8%.

The poor-households inflation indicator is weighted more towards the goods they are likely to consume, while the headline Consumer Price Index (CPI) measures price movements in a basket of goods used by a typical household.

The February reading brings year-to-date price growth for this income segment to 2.2%, well below the year-earlier growth of 4.8%.

This was the second time the bottom-30% index used 2012 as the base year, making it directly comparable with headline CPI. Prior to the rebasing, it used 2000 prices.

The PSA noted slowing price growth in food and non-alcoholic beverages (0.5% from 0.7% in January 2020); alcoholic beverages and tobacco (21.9% from 22.4%), transport (2.9% from 3.5%), and communication (0.3% from 0.4%).

“Food was likely the main reason for the dip in inflation with vegetables, rice and selected fruits experiencing slower inflation as food supply chains normalized after the storms in late 2019. Transport prices are also one reason for lower inflation in February as crude oil prices fell worldwide,” ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Food inflation for the poorest households was 0.4% in February, slowing from 0.6% the previous month.

Price growth eased in meat (2% from 2.1%); fish (8.1% from 8.7%); vegetables (5.3% from 6.6%); and food products “not elsewhere classified” (7.9% from 8.5%).

Prices continued to decline for rice (-6.3% from -6.5%); corn (-4.6% from -2.6%); and sugar, jam, honey, chocolate and confectionery (-2.8% from -3.3%).

Inflation for poor households in Metro Manila eased to 1.9% in February from 2.1% in January. Those living outside the capital experienced inflation of 2.2%, down from 2.3% previously.

ING’s Mr. Mapa noted these February prices do not yet reflect the enhanced community quarantine (ECQ) in Luzon, which was imposed in March. “[G]iven that the Department of Trade and Industry (DTI) has induced a price freeze, we are not sure if PSA will be able to accurately report inflation,” he said.

“In the past, inflation for areas under the state of calamity are excluded from the survey and given ECQ covers Luzon, we are not sure if it will continue given that interviews are conducted face to face,” he added.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion expects price growth in March to “soften further.”

“With the collapse of global oil prices and the corresponding price freeze implemented by government agencies concerned, annual increases may have slowed down further because of the ECQ on Luzon,” he said in a separate e-mail.

The DTI, along with the Agriculture and Health departments, issued on March 18 a joint memorandum circular announcing the price freeze on goods after the declaration of the state of calamity.

Prices of basic goods were frozen from March 16 to May 15, following President Rodrigo R. Duterte’s declaration of a six-month state of calamity on March 16 in response to the outbreak of coronavirus disease 2019.

An initial price freeze was put into place after a declaration of public health emergency on March 8. — Jobo E. Hernandez

NEA authorizes power co-ops to apply for loans

RURAL power cooperatives in rural areas have been given the green light to apply for short-term loans from financial institutions to cushion the impact of falling power demand during the enhanced community quarantine (ECQ).

The National Electrification Administration (NEA) said Tuesday it allowed 121 electric cooperatives (ECs) to borrow money from financial institutions to shore up working capital during the downturn in power usage.

“We take cognizance of the EC’s mandate to operate to ensure continued service delivery to the member-consumer-owners during the state of calamity. However, the financial condition of the ECs might be adversely affected due to the COVID-19 situation,” NEA Administrator Edgardo R. Masongsong said in a statement.

The Department of Energy (DoE) nsaid power demand fell by around 30% during the Luzon-wide lockdown and the implementation of a state of calamity due to the coronavirus disease 2019 outbreak.

The agency tasked to oversee the industry said electric cooperatives must obtain loans that are “fair and equitable.”

It said that the loans must have a repayment period not exceeding three years, “reasonable” interest rates which are the lowest possible. The loan amount must not exceed three times their average billings.

“No encumbrance of real properties, or a substantial portion of other properties or assets, will be made by the ECs,” Mr. Masongsong said.

The NEA has reported that over 80 ECs have been granted an extension of bill payments of up to 30 days from the end of the quarantine period on April 14, following an order from the DoE.

The department said some power stakeholders have expressed their intention to suspend operations as electricity demand drops.

“A decline in power demand does not mean that operations could and should be put to rest,” DoE Alfonsi G. Cusi said in a statement Thursday. — Adam J. Ang

Poultry, pork supply deemed ample amid checkpoint snags

AGRICULTURAL groups said the poultry supply is ample despite worries over the flow of food to locked-down cities during the Enhanced Community Quarantine (ECQ) imposed to contain coronavirus disease 2019 (COVID-19).

In an interview, Samahang Industriya ng Agrikultura (SINAG) Chairman Rosendo O. So said that poultry supply is more than enough to meet demand.

Mr. So said poultry farmgate prices have fallen due to gridlock at quarantine checkpoints.

“Nawala ang institutional buyers like Jollibee, KFC, Mang Inasal, Max,” (Institutional buyers have disappeared due to the lockdown such as Jollibee, KFC, Mang Inasal, and Max’s), Mr. So said.

SINAG estimates that the average Luzon farmgate price for poultry is at P40-P50, and in some areas as low as P36.

Mr. So added many backyard hog raisers shifted to poultry production due to the effects of African Swine Fever (ASF), boosting supply.

He added that the shorter production cycle for poultry enticed hog raisers.

The typical production cycle for poultry is around 30 to 35 days while hogs take about four to six months to reach marketability.

According to the Bureau of Animal Industry (BAI), there were 69 new ASF outbreaks in Luzon, with 41,953 pigs being culled as a precaution.

The Pork Producers Federation of the Philippines, Inc. (ProPork) confirmed to BusinessWorld that some backyard hog raisers shifted to poultry production to recover their ASF losses.

ProPork President Edwin G. Chen said in a interview that even some some commercial hog raisers shifted to broiler production.

He added that pork supply is also sufficient for the first half of 2020.

“The difference between us and other countries is our archipelagic geography. We have other areas that are ASF-free. Provinces in the Visayas and Mindanao that are virus-free can transport pork to areas with demand,” Mr. Chen said.

United Broiler and Raisers Association Chairman Gregorio A. San Diego added that the nationwide supply of eggs is also ample, though logistics are an issue.

“The problem is distribution because of multiple checkpoints,” Mr. San Diego said.

According to the Department of Agriculture, weekly demand for poultry and meat for Metro Manila is 7,934 metric tons, with a committed supply of 11,074 MT, from Regions 2 and 3. — Revin Mikhael D. Ochave

Visayas power demand drops as businesses shut down

THE Department of Energy (DoE) said power demand declined in the Central Philippines as industrial and commercial establishments, especially malls, closed down due to the coronavirus disease 2019 (COVID-19) outbreak.

Citing data from the National Grid Corp. of the Philippines, the department’s Visayas Field Office on Tuesday said that current peak demand for the grid fell to 1,728 megawatts (MW) on March 28 from 2,186 MW on Jan. 29.

Average weekday demand, meanwhile, also fell to 1,772 MW from 1,870 MW a year earlier.

The DoE said it expects a further reduction in power demand as more parts of the country are being placed under community quarantine. Cebu province was placed under enhanced community quarantine on March 28.

“The daily power situation, as well as the status of all power plants in the region, will be closely monitored to ensure the continuous and stable supply of electricity,” the department said in a statement.

Peak demand in the Visayas grid was initially projected at 2,419 MW in May. In 2019, the grid recorded peak demand of 2,224 MW in May.

The DoE has reported a 30% drop in power demand due to the Luzon-wide lockdown. It has since called on the power industry to continue servicing customers to ensure steady supply of electricity throughout the country. — Adam J. Ang

Property prices rise over 10% in fourth quarter

PROPERTY PRICES picked up in the fourth quarter of 2019, though growth eased from the third quarter, the Bangko Sentral ng Pilipinas (BSP) said.

According to the BSP’s residential estate price index (RREPI), home prices rose 10.2% in the fourth quarter of 2019, accelerating from the year-earlier 0.6% uptick, though growth eased from 10.4% in the three months to September.

The RREPI gauges the average change in home prices across building types and locations and provides the BSP an insight into the property market, bank exposure to which is regulated.

Currently, banks are only allowed by the BSP to have a 20% share for real estate in their loan portfolios, across residential and commercial properties.

Prices of duplex units rose 50.4% in the fourth quarter, reversing the 3.7% decline a year earlier.

Condominium prices rose 18.9%, accelerating from the year-earlier 0.6% uptick.

Prices of townhouses rose 10.1%, after a year-earlier gain of 11.7%. Prices of single-detached homes rose 5.8% after a year-earlier decline of 1.9%.

Home prices in the National Capital Region (NCR) rose 15%, against the gain of 8.2% for provincial homes.

Duplex unit prices in Metro Manila rose 93%, with condominium and single-detached homes rising 21% and 3.5%, respectively. Townhome prices in the capital fell 10.7%.

Outside the capital, duplex prices rose 30.8%. Prices for townhouses, condominiums, and single-detached homes rose 20.3%, 9.8%, and 5.8% respectively.

In 2019, home prices increased by an average of 6.08%, against 2.95% in 2018. — Luz Wendy T. Noble

Filipino Healthcare workers on the US’ COVID-19 front lines

Several years ago, I produced a special TV report on the topic, “What would happen if Filipino healthcare professionals do not report for work?” The point I wanted to make was the vital role that Filipino doctors and nurses, and other healthcare professionals, play in America’s healthcare system.

In the face of the COVID-19 epidemic, it would be heartless to even contemplate that possibility. Filipino doctors and nurses are now in the thick of the deadly struggle against the pandemic, like soldiers sent to the frontlines — and, like soldiers, some of them may not come back alive. We should all hope and pray that no harm will befall them and that they will continue the good fight, in spite of lack of rest and sleep and, worse, in spite of lack of adequate protection against the unseen foe. So many lives depend on them.

I feel personally concerned because some members of my family could be involved in the struggle. My elder sister, Dr. Evangeline Garcia, is a medical practitioner in Maryland. Because she is 84 years old, she has been advised to stay home. I should thank the Lord for that, although, knowing her, she will probably want to go to the frontlines.

I recall that during the first Iraq War, as a reserve Lt. Colonel in the US Air Force, she volunteered for active duty. Mercifully, Saddam Hussein’s forces surrendered before she could be dispatched to the battlefront. But she was actively involved in caring for trauma victims following the 9/11 attack in New York.

One of my daughters-in-law, Anne Marie, is a nurse. Born and raised in New York, she is now doing her share, attending to patients in the San Francisco Bay Area. However, her younger sister, Allison, and her mother, Sonia, who are also both nurses, reside and work in New York.

New York City, from latest reports, has become the epicenter of the pandemic in the US. As of the latest count, there were 29,158 confirmed cases of coronavirus in the city and over 52,000 in New York state. But these are the figures that have been officially reported to health authorities. Who knows how many there are who have not yet been accounted for but are — or could be — infected?

Of the confirmed cases, as of this writing, 517 have died in New York City and 728 in the state. Dreadfully, the numbers could grow exponentially tomorrow and before this column goes to press.

A January 2008 analysis of Census Bureau data indicates that, of the 215,000 Filipinos residing or working in New York, three out of 10 are nurses or healthcare professionals. Many of the rest are their spouses and children.

At Seton Hospital in Daly City, one of the largest medical facilities in Northern California, 60% of the employees are Filipino. Many of them are nurses.

According to Philippine government records, the Philippines is the largest exporter of nurses in the world. As of 2019, one-third of foreign-born nurses in the US are Filipino (that figure does not include my daughter-in-law and her sister because both are native-born New Yorkers).

Since the mid-1960s, when US immigration law favored the entry of professionals, some 160,000 Filipino nurses have joined the US healthcare system. Latest figures indicate that Filipino nurses account for 17.6% of RNs in California. The Golden State is one of the hardest-hit by the pandemic.

According to official records, as of 2016, the Philippines provided the third largest number of actively licensed foreign doctors in the US — 13,507 — next to India and the Caribbean. I also know of several Filipino doctors who had a medical practice in the Philippines but not in the US due to licensing issues. And I understand that some of these doctors have become RNs or Registered Nurses.

Also, according to records, the University of Santo Tomas College of Medicine accounts for the largest number of Filipino doctors in the US (4,545), followed by the University of the Philippines (2,044) and the University of the East (2,070). I believe my elder sister, a UST alumnus, and a first cousin, Dr. Eriberto Tanpiengco (Far Eastern University College of Medicine), were among the earliest doctors from the Philippines to join the American medical corps.

The fact is that Filipino nurses and doctors are among the largest portion of healthcare professionals in the world. This also means that many of them are on the COVID-19 global battlefronts.

Wherever the diaspora has dispatched workers from the Philippines, it is likely that a significant number are healthcare professionals. The two European countries that have reported the largest number of COVID-19 cases, Spain and Italy, also have large Filipino populations — an estimated 150,000 in Spain and 108,000 in Italy (plus undocumented Pinoys whose estimated numbers vary from 20,000 to 80,0000).

In the United Kingdom, where even Prince Charles and Prime Minister Boris Johnson have been found positive for the coronavirus that causes COVID-19, Filipino nurses make up the largest number of foreign RNs at 10,719, according to a parliamentary report dated April 8, 2019. A 2004 report of the Philippine Overseas Employment Administration (POEA) indicates that the UK is the third most preferred destination for Filipino nurses, with Saudi Arabia and the US ranking first and second, respectively.

Also, according to the POEA, of the 2.3 million Overseas Filipino Workers (OFWs) officially accounted for in 2018 (excluding the undocumented), 25% are healthcare professionals. That’s a whopping 575,000 people conceivably out there on the world’s pandemic frontlines.

Needless to say, this massive drainage of healthcare professionals has resulted in a decline in the availability and quality of health services in the Philippines where the COVID-19 coronavirus has also become a major threat.

We would, understandably, wish that these healthcare professionals were in the Philippines, attending to our countrymen.

Years ago, I asked a younger brother of mine, Dr. Vic Makabenta, if he wanted to join my sister and me in the US to continue his medical practice. His response embarrassed me. He said there were more than enough doctors in America and he was needed more urgently in the Philippines (he worked as an assistant provincial health officer in Biliran sub-province until his death in his mid-40s).

But we cannot begrudge those who chose to work overseas. They have their own valid reasons, mainly economic. We should only pray for their safety as they minister to the sick and dying in the midst of the contagion.

Newsweek reported that, as of March 27, more than 50 doctors have died from COVID-19 in Italy. A BuzzFeed News report dated March 26 stated: “Healthcare workers fighting the coronavirus outbreak across the country are getting sick and dying, nurses and doctors say. And despite the fact that they’re essential to fighting the epidemic, no one in the US seems to be keeping track…

“At least 35 California healthcare workers on the front lines of the coronavirus outbreak have already tested positive for COVID-19, state officials reported on Wednesday.”

Who knows how many of these heroes and heroines are Filipino? We can only pray that the numbers are few.

 

Greg B. Macabenta is an advertising and communications man shuttling between San Francisco and Manila and providing unique insights on issues from both perspectives.

gregmacabenta@hotmail.com

Disease and fear in 21st century US-China strategic competition

Since mid-January 2020, China’s political leadership single-mindedly concentrated on managing a deadly coronavirus epidemic that began in the central Chinese city of Wuhan. Recently, however, China has been conducting a major diplomatic and humanitarian offensive aimed at assisting countries that are struggling against the raging pandemic. Since early March 2020, China has been sending medical experts, rapid diagnostic testing kits, and protective medical gear to the Philippines, Serbia, Spain, Iran, and Italy.

From East Asia to the Middle East, China is providing or offering humanitarian and medical assistance in the form of medical expertise and equipment. Chinese officials are also claiming that the COVID-19 pandemic should be viewed as an opportunity for international cooperation not competition. They also publicly flaunted the idea that China’s national lockdown was a national sacrifice that decisively slowed down global spread of the disease.

Diseases have long been the deadliest and most dangerous threat to human lives, despite the unprecedented advances in medical sciences since the early 19th century. The Black Death of the 14th century claimed more lives in medieval Europe in a span of five years than any armed conflict before this epidemic. Another infamous epidemic in history was the Plague of Justinian, which began in the winter months of 6th century Constantinople and then spread throughout the Mediterranean world. The most lethal epidemic in contemporary history happened in the aftermath of the First World War, the Great Influenza Epidemic of 1918-20.

Diseases have also provoked human fear, which is oftentimes worse than the diseases themselves. This is because through human history, several diseases have plagued all human societies, and they have claimed more lives than natural disaster and warfare combined. As a case in point, the Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS) represents a far greater threat to human beings than armed conflicts for most Sub-Saharan Africans and for many more people around the world. This fear is further fueled by the acceptance of the stark reality that diseases, as existential threats to human existence, can never be eradicated despite rapid progress in the natural sciences and medicine in the last two centuries.

The COVID-19 epidemic added two very volatile elements to the ongoing US-China strategic competition, disease and fear. China’s moves to play the lead in addressing the global pandemic and spin to blame the US for the transmission of COVID-19 in Wuhan City was to deflect the Chinese public’s resentment because their top leaders suppressed early information and mishandled the epidemic.

Municipal and provincial party leaders in Wuhan City and Hubei Province, fearing the wrath of the central government, downplayed the extent of the infection. When the outbreak was apparent, the central leadership, like any authoritarian regime, reacted by blaming local officials; ramping up domestic censorship; arresting or silencing whistle-blowers; and withholding information about the brewing public health crisis while at the same time refusing American offers for assistance. China is also worried that its international status has been severely damaged by the mishandling of the outbreak and thus, by donating medical supplies, China is trying to repair this damage by projecting an image of a responsible and generous power.

The US and its Western European allies viewed with uneasiness China’s moves in fostering international cooperation against the pandemic. They see them as components of a calculated diplomatic gambit aimed at giving China the opportunity to project itself as a responsible great power now leading global society in confronting this raging pandemic to cover their liability in mishandling the outbreak and record as a social incubator of deadly epidemics.

China’s flaunting of its effectivity in managing the epidemic with its well communicated assistance like medical supplies and equipment, medical advice, and even organizing public health systems for other governments is seen by the US as an attempt to take advantage of the Trump Administration’s early missteps in addressing the crisis.

Many Western European states agreed that China is leveraging on its current position of being the leading producer of medical equipment and supplies by rewarding states that are considered as friendly and withholding them from countries that are critical of Chinese interests and policies.

For Washington and its allies, China is using its advantageous position as the world’s largest maker of medicine and protective medical suits to temper the global anger over its initial mishandling of the COVID-19 outbreak and to prove that its authoritarian model of governance works effectively against all types of crisis. There is no doubt that the 2020 Wuhan virus pandemic has opened a new front in the raging US-China strategic competition.

 

Dr. Renato de Castro is a trustee and convenor of the National Security and East Asian Affairs Program, Stratbase ADR Institute

Pandemics, police power, and private contracts

With the worsening COVID-19 outbreak, President Rodrigo Duterte has shifted gears. What began as a mere entreaty to the private sector to extend bills payments, grant reprieves on rental fees to alleviate day-to-day worries of the everyman, has now morphed into something broader.

In an unprecedented “virtual” special session, Congress approved the bill now known as Republic Act No. 11469, or the “Bayanihan to Heal as One Act,” granting the President emergency powers to address the public health crisis. While Congress has parsed out contentious provisions including the extension of emergency powers and take-over of private businesses, the current law still somehow bears upon the property rights of citizens.

Under the Bayanihan Act, the President is empowered to order private hospitals, passenger vessels, and other establishments to direct their operations towards COVID-19 efforts. Unjustified refusal or the inability to operate such enterprises for COVID-19 related purposes will allow the President to take over the companies’ operations. The President may procure the lease of real property for medical purposes; require businesses to prioritize and accept contracts for materials and services; impose grace periods for the payment of residential rent and bank loans; and ensure the availability of credit by lowering effective lending interest rates, among others.

An Orwellian application of the law will impinge upon a right oft-overlooked in the constitutional hierarchy — the non-impairment of contracts. This is contained in Section 10, Article III of the Constitution, which provides that no law impairing the obligation of contracts shall be passed.

The businesses contemplated by the new Bayanihan Act share existing contracts with a myriad of parties such as employees, lessees, lessors, buyers, sellers, contractors, tenants, manufacturers, customers, and the like. As it stands, the law carries the possibility of altering the terms of existing contracts, imposing new conditions, or dispensing with conditions already expressed.

The purpose of the non-impairment clause is to protect private agreements from State interference, with the end goal of encouraging trade and credit by promoting the stability of contractual relations (The Provincial Bus Operators Association of the Philippines v. Department of Labor and Employment, G.R. No. 202275, 17 July 2018).

As early as the 1922 case of Clemens v. Nolting (G.R. No. L-17959, 24 January 1922), the Supreme Court ruled that “[a]n interference with the terms of a legal contract by legislation is unwarranted and illegal.” In then unbending terms, the Supreme Court stated that a law which impairs the obligation of a contract is null and void.

The freedom of contract, however, is not meant to be absolute. Over time, the Supreme Court has expounded on the application of the non-impairment clause and carved out exceptions thereto. Foremost is that the right to non-impairment yields to the State’s police power.

Hence, a statute passed in the legitimate exercise of police power, although incidentally destroying existing contract rights, must be upheld by courts. The non-impairment clause is understood to be subject to reasonable legislative regulation aimed at the promotion of public health, morals, safety, and welfare (The Philippine American Life Insurance Company v. The Auditor General, G.R. No. L-19255, 18 January 1968).

Similar to the freedom of contract, however, the invocation of police power is not set in stone. There is the well-settled rule that a statute built on police power requires the concurrence of a lawful subject and lawful method; in other words, the interests of the general public are involved and the means employed to promote public interest are reasonably necessary (Southern Luzon Drug Corporation v. Department of Social Welfare and Development, G.R. No. 199669, 25 April 2017).

In National Development Company v. Philippine Veterans Bank (G.R. Nos. 84132-33, 10 December 1990), the Supreme Court clarified that police power trumps the non-impairment clause only “where the contract is so related to the public welfare that it will be considered congenitally susceptible to change by the legislature in the interest of the greater number.” In the same case, which involved a Marcos-era Presidential Decree extinguishing all mortgages and liens attached to assets of a bankrupt corporation, the Supreme Court found that the loan and mortgage contracts were purely private transactions. Without the “indispensable link” to public welfare, the Supreme Court held that there was an impairment of the obligation of the contract, a deprivation of property rights, and, accordingly, a need to annul the law (i.e. the Presidential Decree).

All in all, government interference with private contracts is justified under police power, so long as the private agreements carry a demonstrated connection to the public interest, and so long as police power is tempered by both lawful subject and method.

Due to the pandemic, the new law theoretically conforms to the requirement of “lawful subject” under the police power concept. It remains to be seen, however, whether the means to carry out the declared State policy are “reasonably necessary.”

For instance, the President’s power to lower lending rates may unduly affect lenders whose charges and interests have already accrued, and which may be considered vested property rights. The moratorium on residential rent and loan payments, while easing the financial burden of the lessee and debtor, in turn strains the landlord and creditor. Establishments which are vaguely described as “no longer capable of operating their enterprises” for the COVID-19 efforts, may be subjected to take-over by the President.

To be sure, the coronavirus cannot enlarge the scope of the emergency powers bestowed upon the President. If, in the exercise of such emergency powers, the President would impair contracts in favor of specific interests, then even an outbreak should not prevent courts from later nullifying such actions. With portions of the new Bayanihan Act painted in such broad and abstract strokes, however, the quarantined public can only rely on the wisdom of the executive branch in implementing the law, for now. And there lies the rub.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes, and not offered as, and does not constitute, legal advice or legal opinion.

 

Samantha Beatrice P. King is an Associate of the Litigation and Dispute Resolution Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

spking@accralaw.com

(632) 8830-8000.

Netflix watches as Instagram unites a quarantined world

By Tara Lachapelle

“OH, I LIKE HER,” she says, referring to a berry-toned lipstick.

Sarah Hyland, the 29-year-old funny actress best known for playing Haley Dunphy on ABC’s Modern Family, is trying on makeup for an Instagram Live audience while at home riding out the pandemic, seemingly as bored as the rest of us. It’s by no means a production: just Hyland in front of her cell phone, using an in-app filter that gives her eyeliner and oversize lashes, sitting at what looks to be a desk, weeding out her cosmetics collection.

I don’t know why I’m watching. “Why am I watching this?,” one of her thousands of other viewers suddenly posts in the scrolling comments, as if from my thoughts to that person’s fingertips.

Having our normal daily lives upended by the coronavirus has heightened the demand for entertainment — and not just Netflix. We’re looking for content that provides some semblance of human connection, intermittent LOL moments to briefly escape reality. As Kevin Roose put it in the New York Times last week, “The virus is forcing us to use the internet as it was always meant to be used.”

There’s also something comforting about seeing celebrities going through the same thing as everyone else, flattening the societal hierarchy so that their feeds run alongside that of our own friends and families. Social media is a place for wholesale interaction, whether it be through memes, amateur TikTok dances, silly Snapchat snaps, Instagram boomerangs of the night’s meal or photos of the view outside, where we all suddenly wish we could be. It’s just enough pleasant distraction; we don’t have to commit our full attention to a 45-minute TV episode, especially when there’s already too much lonely, idle couch viewing happening because of the shelter-in-place orders.

Kantar, a consumer research firm, is finding that as countries move deeper into the pandemic, TV viewing and social media engagement both rise by more than 60%. (At that rate, we could quickly grow bored with apps like Netflix and Disney+.) The US may still be in the relatively early stages, but in Italy, one of the hardest-hit countries, Facebook Inc. said that Instagram and Facebook Live views doubled in a week.

That yearning for connection is giving more adults a window into why younger people are so amused with watching their peers and celebrities just going about their lives — even when they appear to be doing nothing special at all. George Costanza would love it: videos about nothing.

But if that is what’s missing from Netflix and other TV, could it be that someday it’s not? Perhaps the future of streaming is to aggregate both studio-produced content and user-generated content in a way that allows you to seamlessly scroll between both. That’s how we’re starting to use entertainment, but that’s not yet how it’s delivered to us. Facebook Watch is a step toward the idea, though it has a long way to go. And Google’s YouTube is more of a video-search platform than a sit-back-and-stream service (notwithstanding its YouTube TV subscription for live programming).

Quibi, a streaming app launching April 6, borrows from the brevity of user-generated social content, but leaves out the human-connection aspect. It’s the brainchild of Jeffrey Katzenberg and Meg Whitman, a pair of Hollywood and tech old timers, who say the name is short for “quick bites” (though it’s pronounced “qwih-bee”). All of its programs will have episodes that are 10 minutes long or less. Plenty have scoffed at the idea of Quibi trying to get 25- to 35-year-olds to pay $5 a month for an app with bite-size content that still contains ad interruptions. Yet, Katzenberg and Whitman have managed to raise nearly $2 billion for the service and have struck production deals with major studios and entertainers, including Chrissy Teigen and actress Sophie Turner.

Social media used to be something college kids did on their laptops, separate from TV time. Now we all do it on our phones, often while the TV is playing. It shows that what’s missing from Netflix, Disney+ and all the other emerging streaming ecosystems is the ability to connect with one another.

 

BLOOMBERG OPINION

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