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Well worth the wait

Date A Live: Rio Reincarnation
PlayStation 4/PC via Stream

DATE A LIVE has been around since the turn of the decade, and it’s a testament to the franchise’s appeal that it picked up a loyal following off the bat and, more importantly, developed the legs to cross media platforms over time. Written by Kōshi Tachibana, the light-novel series parodies the invasion proposition common to Japanese mecha offerings and runs with it via Idea Factory mainstay Tsunako’s distinct art style; it deftly mixes science fiction and romantic comedy, with organized undertakings to prevent alien annexation deemed successful only when the occupying beings wind up falling for the principal protagonist.

The evidently ludicrous premise notwithstanding, Date A Live works, and how. It centers on the exertions of kind-hearted high school student Shido Itsuka to have “spirits” from other dimensions — the cause of “spacequakes” which have plagued Eurasia for the last three decades — love him. With the aid of foster sister Kotori, classmate Origami Tobiichi, and other members of the Anti-Spirit Team, he sets out to “seal” any given spirit’s power with a kiss. Interspersed with his efforts to hone his unique capacity to attract affections via dating-sim training exercises are those of defenders to keep would-be conquerors at bay by engaging them in battle.

Date A Live does have serious undertones, but sticks to its conceit with its fatuous but self-aware treatment of its narrative. Needless to say, it offers fan service in spades, but always in support of the overarching plot. Characters are well developed, literally and figuratively, and tackled with surprising depth even amid seemingly silly situations. Parenthetically, the proficient handling of the intellectual property extends to other media; the short-lived manga and continuing anime adaptations of the 20 volumes so far published by Tokyo-based Fujimi Shobo are, if nothing else, faithful to their source material.

Considering the popularity of Date A Live, its branching out to video gaming was a matter of when, not if. And, true enough, it made its industry debut with Date A Live: Rinne Utopia, which made its way to the Sony PlayStation 3 in 2013 and to the PS Vita two years later. Date A Live: Arusu Install hit store shelves between the two releases, followed by Date A Live Twin Edition: Rio Reincarnation. Significantly, four years would pass before developer and Idea Factory subsidiary Compile Heart would bring localized versions of the titles to Western audiences.

Still and all, here’s the good news: Date A Live: Rio Reincarnation is well worth the wait for gamers bereft of any knowledge of the Japanese language. Above all else, it contains all three visual novels; more than the apparent value-for-money proposition, the presentation allows for complete appreciation of the material whether on the personal computer or on the PS4. Incorporating events in the first four volumes of the light-novel series, Date A Live: Rinne Utopia has Shido dealing with his supposed best friend since childhood. Meanwhile, Date A Live: Arusu Install and Rio Reincarnation come after the first seven volumes, and sees him facing off first with an artificial intelligence while stuck inside a virtual-reality game, and then with a new spirit in search of “the most important thing.”

As with most other visual novels, Date A Live: Rio Reincarnation makes heavy use of text over static backgrounds for story exposition. That said, it can be counted among the best of the genre for its excellent writing and restrained audio-visual presentation. Given the subject matter and its fan service obligations, it could easily have given in to temptation and gone over the top; instead, it exhibits remarkable subtlety and nuance even as it sets out to deliver on its promise. Moreover, it boasts of gameplay mechanics that give gamers ample freedom of choice; in the six hours or so it will take them to finish each title on first pass, they’re provided with options to frame the ending as they see fit.

Considering the amount of reading gamers have to go through, Date A Live: Rio Reincarnation creditably sports spot-on English subtitles (outside of the occasional typographical or translation error) backstopped by stellar Japanese voice tracks (which, for some reason, Shido is devoid of). At the same time, they’re compelled to wade through dating-sim conditions numbering in the triple digits, thus enhancing the games’ replay value. As there is hardly any aspect of the collection testing the upper limits of hardware processing, the interface is similarly relaxed and trouble-free on the PC and PS4. However, it must be noted that the Steam version remains faithful to the original Japanese releases, while Sony has, in choosing to stick to stringent community guidelines, seen fit to modify two cutscenes and excise four images from its console’s iteration.

Nonetheless, Date A Live: Rio Reincarnation is a boon to the library of visual-novel enthusiasts in general and of franchise faithful in particular. It honors its source material with consistently excellent character designs, lighthearted treatment of proceedings, and understated fulfillment of fan-service commitments. It comes highly recommended, and should tide gamers over until the release of Date A Live: Ren Dystopia next year.

THE GOOD:

• Faithful to source material

• Outstanding presentation

• One of the best in the VN genre to date

• Tons of content to go through

• Excellent character designs

THE BAD:

• Steam version sports oversized text that cannot be customized

• Keyboard binding/remapping limitations

• PS4 version modifies two cutscenes and omits four images

• Hardly any variations in gameplay over the three included titles

• Requires some background knowledge of the franchise

RATING: 8.5/10

POSTSCRIPT: First things first: Epic Astro Story is Japan-based Kairosoft’s latest in a series of ventures to port its mobile-gaming intellectual properties to the Nintendo Switch. Moreover, the simulation title is far from a new one, and even as it made its way to the Android and iOS platforms seven years ago, its roots continue to be evident in its hybrid-console iteration. From the home screen thumbnail to the presentation to the interface, there are aspects that will undoubtedly serve as reminders of its small-screen origins. That said, it’s nothing short of excellent, succeeding in its intent to keep gamers engrossed in its proceedings.

Like any other simulation title, Epic Astro Story essentially makes gamers operations managers of its realm. Unlike any other simulation title, it dreams big. It’s not about building a tennis club or ski resort or even a village from scratch. Rather, it sets as its main objective the management of a colony in space and, concomitantly, the exploration of other planets. Needless to say, proper handling and investment of resources are required, and doing so enables progress. Development leads to more citizens attracted, which leads to more demand for land, which leads to the fostering of harmonious relations with neighboring planets (or, as the case may be, the conquering of hostile forces), which leads to more areas to forage. And so on and so forth.

Epic Astro Story may sound daunting, but, in truth, it’s rollicking good fun helped in no small measure by its irreverent humor especially pandering to Trekkies. If there’s any negative, it’s that the proceedings can drag; the option to speed up and fast-forward the colony’s evolution is made available only after one playthrough. In sum, though, it’s a delightfully stress-free game that time and again provides a sense of accomplishment. Perfect for easy negotiating on the go, it generates tons of replay value and figures to be on any self-respecting simulation buff’s steady rotation of titles for some time to come. (9/10)

Furwind is long on promise as an ode to action platformers of decades past. All of the usual factors making the genre popular are present in Boomfire Games’ offering. First, it makes use of an animal as the title character out to save the world. Second, it has its leading man — or, rather, fox — and his surroundings presented in colorful pixel art. Third, it employs immersive music and ambient sounds to keep gamers transfixed as they explore cave after cave. Fourth, it requires hand-eye coordination, no small measure of tactics, and a willingness to grind in order to attain success.

If Furwind works for the most part, it’s because the tasks at hand are diverse but not entirely unfamiliar, stimulating but not to the point of frustration, and rewarding by way of preparation for the next challenge. The story itself is far from unique, and the game sometimes stumbles in pushing it forward with passable voice acting and myriad text screens that exhibit the occasional grammatical error. Not so the undertakings, which are designed to keep the adrenaline pumping. Movement is fluid and animations are crisp while in the midst of timed jumps, item collection, and enemy fights, more than making up for the evident reuse of background assets.

Perhaps Furwind could have benefited from more polish; its official Nintendo site, for example, doesn’t do a good job of selling its strengths. Considering its Spanish roots, however, its stumbles with a language that isn’t its developers’ native tongue can be forgiven. And it does have plenty of strengths to boast of. At $9.99, it’s likewise a good value-for-money proposition designed to keep gamers glued to the screen for a good half a dozen hours of fun and entertainment. It presents a variety of routes, tough but fair battles, intriguing level designs, and ingenious attack modes that place it a cut above others in its price point. (7/10)

THE LAST WORD: Tiny Metal: Full Metal Rumble on the Switch arguably provides more bang for the buck vis-à-vis its Steam version (reviewed on this space last week) owing to its portability. Even as it loses absolutely nothing in the translation to the hybrid console, it gives gamers the option of taking it in while on the go. Controls are responsive, and while some stuttering is evident when the screen gets busy, the gameplay remains unaffected in the face of its turn-based mechanics. A can’t-miss release in any case. (9/10)

Japan’s love of foreign insurance set to wane

TOKYO — Japan’s craze for overseas insurance products, driven by a need for better yield than the near-zero ones at home, has been a long-standing headwind for the yen as domestic insurers bought foreign bonds.

But demand is likely to cool as the authorities clamp down on aggressive marketing for these foreign-currency denominated insurance products, which will curb their sales, and hence the selling of yen from Japan.

That is bad news for Japanese policy makers who are concerned that a stronger yen hurts export competitiveness, especially as the currency has strengthened 2.7% against the dollar so far this month on flight to safety flows boosted by an escalation in Sino-US tensions.

Industry sources say a surge in demand for foreign-currency denominated life and pension insurance since Japan’s move to negative interest rates three years ago has seen at least 4 trillion yen ($37.8 billion) of such products being issued, or one percent of the bloated Japanese insurance market.

Japan’s life insurers, big players in the global financial markets, thus hold foreign-currency bonds as a hedge against the currency risk stemming from these products.

For instance, Taiju Life Insurance, the country’s fifth-largest private life insurer, has been increasing holdings of foreign bonds by 350 billion yen a year in recent years.

Such flows can exert downward pressure on the yen, because by far, the majority of other foreign bond investments by investors are currency-hedged, thus having a neutral effect on the Japanese currency.

Some analysts say heavy demand for the US and Australian dollar for these Japanese insurance products is likely to have helped to cap the yen in recent years.

“Together with foreign asset buying by the government’s pension fund, they are helping to curb the yen’s strength,” said Yoshinori Shigemi, global strategist at JPMorgan Asset Management.

But now, the products are coming under more intense scrutiny due to a rise in complaints, and many analysts think yen selling stemming from these products will likely slow.

That would be a headache for policy makers as the yen — considered a safe-haven currency and hovering at seven-month highs versus the dollar — is likely to stay resilient with the trade war unresolved amid growing uncertainty about the global economy. The yen tends to strengthen during times of economic stress as Japan is the world’s largest creditor.

The Life Insurance Association of Japan said the number of complaints from customers who bought such products at banks, a major distribution channel for the product, doubled in three years to 2018/19.

The biggest complaint was that sales staff at banks did not fully explain risks, including the possibility investors will not get back what they paid for if the yen strengthens sharply.

The country’s financial watchdog is also tightening its grip on foreign insurance products.

“We have been checking whether flyers insurers hand out to investors properly explain the risks. We are also starting to enhance our product review,” said an official at the Financial Services Agency.

“A lot of consumers have the impression that ‘insurance’ is safe when in fact they are taking financial risks,” said JPMorgan Asset’s Shigemi. “Foreign currency-denominated insurance, in a way, is a bit like an oxymoron.” — Reuters

OUTLIER: Investors unload SMPH shares on market jitters

By Marissa Mae M. Ramos, Researcher

SM PRIME Holdings, Inc. (SMPH) was among the most traded stocks last week due to a slew of factors that may adversely affect the company’s bottom line in the short term such as the lower-than-expected second-quarter economic growth, the renewed escalation of US-China trade tensions, and statements of the Chinese Embassy signaling a crackdown of its citizens’ offshore gambling activities in the country.

A total of P1.954 billion worth of 53.792 million shares of SMPH exchanged hands on the trading floor from Aug. 5 to 9, data from the Philippine Stock Exchange showed.

The company’s share price slipped 5.6% on a week-on-week basis to P35.5 apiece last Friday versus the P37.6 closing price in Aug. 2. Year to date, the stock price dropped 4.1%.

“Mainly, it’s the escalation of the US-China Trade war wherein SMPH succumbed to profit-taking by foreign investors while other investors decided to accumulate,” said Aniceto K. Pangan, equity trader at Diversified Securities, Inc., in a mobile message.

This view was shared by Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial, Inc., adding that the sell-off was also due to the last week’s “overall market sentiment.”

“We faced a lot of headwinds [last] week including the escalating trade tensions between the US and China as well as the dismal second-quarter GDP (gross domestic product) data,” he said in an e-mail.

Mr. Tantiangco also cited China’s crackdown on cross-border gambling of its citizens, which “would have an effect” on SMPH’s earnings.

“The crackdown, if it pushes through, would vacate a lot of property spaces both in the commercial and residential segment. This, in turn, would bring down property prices which could then narrow SMPH’s margins,” he said.

“Taking away the Chinese offshore gaming workers in the Bay Area where SMPH has an exposure could drag the overall business activities in the said area which in turn would negatively affect the property company,” he added.

Trade tensions between the US and China rose anew last week after US President Donald J. Trump called China “a currency manipulator” due to the recent drop of the yuan against the dollar. This came after Mr. Trump threatened to impose a 10% tariff on $300 billion worth of Chinese imports the previous week.

At home, the economy displayed a slower-than-expected GDP growth at 5.5%, lower than the 5.6% expansion in the first quarter and is the slowest in 17 quarters or since the 5.1% growth logged in the first quarter of 2015.

Meanwhile, the Chinese Embassy in Manila issued a statement regarding a possible crackdown of the offshore gaming activities of its citizens in the Philippines amid allegations that Chinese nationals working in the country’s offshore gaming industry were recruited illegally.

The statement also mentioned the presence of overseas gambling hubs has resulted in the illegal transfer overseas of “hundreds of millions of Chinese yuan every year.”

The statement led to sell-offs in property stocks on Thursday and Friday wherein a significant portion of these companies’ earnings stemmed from leasing their spaces to gaming firms.

Despite these developments, the analysts remain optimistic on the SMPH’s profitability for the year.

SM Prime recorded a 16.1% net income growth in the first half of 2019 to P19.3 billion from P16.62 billion in the same period last year. At the second quarter alone, its net income attributable to parent company grew 16.4% to P10.503 billion from P9.025 billion in the same three months in 2018.

“Looking forward, we expect SMPH’s fundamentals to remain robust especially now that our monetary policies are easing [and] interest rates are moving downwards, giving bright prospects to the firm in particular and to the property sector as a whole,” said Philstocks’ Mr. Tantiangco.

“For this year, SMPH’s earnings growth could meet or even exceed its five-year compounded annual growth rate of 14.6% so long as it maintains its strength across all of its segments especially in its mall operations and residential arm,” he said.

Mr. Tantiangco noted that it could be “gloomy” for SMPH’s share price performance in the short term due to “overall market sentiment,” but that it may recover in the medium to long term “once things get clear.”

“For now, support is seen at P35.90 while resistance is at P37.00,” he said.

Diversified Securities’ Mr. Pangan shared this view.

“In the short term, it will continue to be volatile due to poor market conditions, but in the long run, [the] company will be able to sustain its growth,” he said.

Mr. Pangan placed the stock’s immediate support around P34 with next support at P31.2 while immediate and next resistance is pegged at P38.2 to P39.6, respectively.

PHINMA Properties returns to luxury market

PHINMA Properties marked its return to the luxury market with the launch of Likha Residences in Muntinlupa City.

In a statement, Phinma Properties said it recently broke ground on Likha Residences, a high-end development offering 68 townhouses with three and four-storey options.

Angelo Mañosa, architect and principal designer of Mañosa & Co., Inc., combined contemporary design with the eco-friendly elements of the “bahay kubo” for Likha Residences.

“My vision for Likha Residences is to design a home that’s accommodating, spacious, and livable for its residents,” he said.

With this new project, Raphael B. Felix, president and CEO of PHINMA Properties, said: “We have set a new benchmark for our future properties.”

Filipinos among the world’s most confident consumers (Q2 2019)

Filipinos among the world’s most confident consumers

Subic-Clark cargo rail line construction seen starting in early 2020, DoTr says

THE China-funded Subic-Clark Railway Project is set to begin construction by the first half of 2020, the transportation department said.

Transportation Secretary Arthur P. Tugade said last week the Philippines may receive from China the shortlist of contractors for the cargo train project within the month. From this list, the government will choose, through a competitive bidding process, the firm that will build the project.

Mr. Tugade said the auction may be finished before the year ends.

“We are expected to commence the process wherein we will be able to connect cargo operations between Clark and Subic by rail… by the first quarter next year earliest, or at the latest, second quarter,” he said.

Because the P50.03-billion Subic-Clark railway is financed through a China loan, the Philippines is required to select a contractor from a list of three Chinese nominees.

The Philippines initially targeted to start building the Subic-Clark railway this year, but the delay in receiving the shortlist of contractors from China pushed the project beyond the timeline.

The railway was originally scheduled to be completed by 2022 — the last year of President Rodrigo R. Duterte’s six-year term.

The cargo line is among the government’s 75 flagship infrastructure projects. It will run 71.13 kilometers divided into two sections: a 64.19-kilometer main line connecting Subic Bay Freeport Zone and Clark Freeport Zone, and a 6.94-kilometer link to the Subic Bay Port’s New Container Terminal.

The rail line is part of the Philippine National Railways (PNR) Luzon System Development Framework, which intends to integrate the logistics network in Central Luzon. — Denise A. Valdez

DTI opposes Labor dep’t role in determining outsourced jobs

TRADE SECRETARY Ramon M. Lopez said he is against proposals to empower the Secretary of Labor to determine which jobs at a company are outsourced, a key feature of the re-filed Security of Tenure bill prepared by the Department of Labor and Employment (DoLE).

Labor Secretary Silvestre H. Bello has said that his department’s version of the new Security of Tenure (SoT) bill will give him such powers, potentially determining which outsourced functions at each company will be illegal.

The SoT bill from the last Congress — Senate Bill 1826, which was also adopted by the House — was vetoed by President Rodrigo R. Duterte after the National Economic and Development Authority (NEDA) weighed in that it lacked balance, with insufficient protections for investors, who might hesitate to locate or expand operations here.

Mr. Lopez told BusinessWorld that the Department of Trade and Industry’s (DTI) position is that based on Mr. Duterte’s veto message, he thinks that the DoLE’s recommendation will not allow employers sufficient hiring flexibility.

Mr. Bello has said that he is planning to change a provision in SB 1826, which called for a tripartite body to determine which occupations in a business can be outsourced and which workers should be offered a path to regular status. He said this proposal will be added to the DoLE’s draft SoT Bill which will be submitted later this month.

“Based sa sinabi ng pangulo, siguro ‘di ko muna tatanggapin ‘yun (based on what the President said, I think I cannot accept that (recommendation)… ‘Pag ginawa mo kasi ‘yun (If you do that), you’re not giving companies flexibility,” he said.

In Mr. Duterte’s veto message dated July 26, he said businesses should be permitted to identify which activities within their operations should be outsourced or not “especially when job-contracting will result in economies and efficiencies in their operations, with no detriment to the workers, regardless of whether this is directly related to their business.”

Prior to the veto, Mr. Bello sent a letter to the Palace stating DoLE’s support for the SoT Bill, co-signed by Mr. Lopez. Mr. Lopez said that the DTI supported the passage of the SoT Bill but agrees with Mr. Duterte that some provisions of the bill should be adjusted to allow hiring flexibility.

“It’s important that we keep the flexibility of the company kasi kung bibigyan namin ‘yan ng restriction at iba pang body ang mag-de-determine (because if we restrict that and give that power to another body), it makes the system more rigid and not that conducive for business,” he said.

When asked what adjustments could be added to the SoT Bill, Mr. Lopez said one way to guarantee security of tenure is to regularize workers upon hiring. He said having “ease of hiring” will also entail an uncomplicated process in retrenching employees which normally involves a series of clearances.

“(I)f we want to give security of tenure, let’s regularize workers immediately (after hiring). (Let’s have) ease of hiring…at least may choice din na madali ka i-terminate (it allows companies the option of terminating easily),” Mr. Lopez said.

Mr. Bello said that he is set to meet with the DTI before submitting the new SoT Bill to the President. Mr. Lopez said that he and Mr. Bello will meet soon to discuss the draft. — Gillian M. Cortez

Sugar stakeholders seek bigger role in moderating imports

THE Confederation of Sugar Producers (CONFED) is lobbying for a bigger role in moderating sugar imports, saying volumes should be based on projected domestic production shortfalls relative to demand.

The sugar producers are seeking to impose some measure of control on imports after economic managers cited the example of freeing up the rice import market as a possible model for sugar.

“CONFED reiterates its position is no longer avoidable due to the industry’s inability to meet domestic demand, these imports must henceforth be calibrated on the basis of a careful analysis of projected production versus demand, and in consultation with industry stakeholders in which the SRA (Sugar Regulatory Administration) would be the lead agency,” Raymond V. Montinola, spokesperson of CONFED, told BusinessWorld in a text message.

Finance Secretary Carlos G. Dominguez III said in July that the government is taking a close look at sugar import liberalization because price of the domestic product is double the world market price, weighing on the competitiveness of the food processing industry.

Mr. Montinola said the process of making accurate supply and demand projections will require updating industry data on area under cultivation and production estimates from various sugarcane-growing districts, as well as demand estimates from industrial users, food exporters, and domestic consumers.

He also called for better utilization of funding under the Sugarcane Industry Development Act (SIDA).

Asked to comment, Rolando T. Dy, executive director of Center for Food and Agribusiness of University of Asia and the Pacific, said sugar planters and food processors should first reach a “happy compromise” on the possible liberalization of sugar imports given their different needs.

“The former employs hundreds of thousand workers in Negros with no immediate alternative; the latter needs properly priced sugar to compete,” he said in a text message.

He also noted other considerations, such as “1) How competitive are our sugar-based products… like dried mango and banana chips?; 2) How competitive are our local sugar-based products compared to imports like biscuits from Malaysia?; 3) How much sugar is needed (for import) out of total demand?”

Eliseo R. Ponce, an international consultant specializing in Agriculture and Rural Development, said only sugar liberalization can drive the industry to become more competitive.

“We are so far behind… Sugar productivity is not at par with countries like Colombia or even Thailand, so dapat i-angat natin ‘yung (we need to improve) sugar productivity, to improve our production system, the varieties we plant,” Mr. Ponce said.

Mr. Ponce is a former director of the Bureau of Agricultural Research.

“Also the cost of production. We are not as mechanized as Thailand. We are still depending on manual labor,” he added. — Vincent Mariel P. Galang

Power cooperatives seek new mandate for NEA

WIKIPEDIA

ELECTRIC cooperatives are pushing for greater autonomy for the industry by supporting a move to give the National Electrification Administration (NEA) greater budgetary leeway through a proposed law that is backed by some members of the House of Representatives.

Presley C. De Jesus, president of the Philippine Rural Electric Cooperatives Association, Inc. (Philreca), said one of the group’s priorities is the conversion of NEA into the National Electrification Authority.

Through Philreca, which won a seat at the House of Representatives in the last election as a party-list, he said he would push for the passage of House Bill 468 to streamline the budget process for a reconfigured NEA, among others.

The proposed measure, aside from renaming the agency, seeks to define and enhance the powers of NEA, including its functions and operations to achieve the government’s policy for total rural electrification.

Mr. De Jesus, who is Philreca’s nominee in Congress, said the bill is his top priority as a Representative.

Asked to comment, Energy Secretary Alfonso G. Cusi said the electric cooperatives are free to do as they please, even with their plan to convert NEA into an “Authority.”

“Wala ri’ng problema sa akin ‘yun,”(it’s not a problem) he said. “Whether you are authority, you are administration… or whatever, gawin lang natin ang trabaho, wala tayong problema.” (Let’s just do our jobs, and there will be no problems).

In the meantime, he said while electric cooperatives remain under his supervision, the Department of Energy (DoE) will continue monitoring their performance and will cancel franchises for non-performing cooperatives if necessary.

“It’s not a threat, but it’s a job that we have to do,” he said.

“Cooperatives have done their job,” Mr. Cusi said. “The only thing is that now, the game requires a higher level of performance so we have to elevate.”

However, Senator Sherwin T. Gatchalian questioned the proposal, saying the DoE and NEA, in their current form, need to coordinate their actions especially on rural electrification.

“Personally, off-top, the mandate of NEA is to supervise all electric cooperatives in the country as well as to make sure that the missionary responsibilities of the electric co-ops are being met, meaning they are given a franchise to operate and to serve all the unserved areas,” he said.

Mr. Gatchalian said the cooperatives’ mandate requires “social responsibility.”

“DoE, being the lead agency when it comes to energy and power, has that responsibility also,” he said.

He said the two agencies “should be in line when it comes to electrification policies.” He added that the two cannot be separated, since DoE as the lead agency crafts the policies that NEA implements.

“NEA needs to work with DoE, and DoE needs to have control the agency because it is mandated to roll out electrification,” he added. — Victor V. Saulon

CoA cites CAAP failure to submit contract of PAL leases

THE Commission on Audit (CoA) said the Civil Aviation Authority of the Philippines (CAAP) failed to provide supporting documents for payments arising from land rented from Philippine Airlines in Bacolod and Ozamiz.

In its 2018 annual audit report, CoA noted the absence of a lease contract to cover the lease and property tax payments.

The findings were issued after CAAP agreed in December to pay PAL P157.625 million to settle PAL’s claims against the agency for unpaid rent between 1992 and 2018.

“The absence of a lease contract detailing therein, among others, the nature, rates, duration, description and actual measurement of the lot area being leased, as well as the rights and obligations of each party raised doubts on the validity of the claim and the accuracy and reasonableness of the rental rates being charged,” said the state auditors.

CoA recommended that CAAP “coordinate with PAL for the submission of the duly approved lease contract and other documents to support the alleged obligation for rental fees from 1992 to 2018.”

It added, “[We recommended that Management should] require the refund of the amount paid to PAL, if the prior years’ obligation could not be sustained.” — Vince Angelo C. Ferreras

Further talks scheduled with China Customs over shipments of cigarette-making machinery

THE DEPARTMENT of Finance (DoF) said it will hold further discussions with Chinese customs officials about shipments of cigarette-making machines to the Philippines, which must be registered but are often used in the illicit production of cigarette products that evade tax.

The discussions follow confirmation from the Bureau of Customs (BoC) that it has received a preliminary report from China on such shipments.

“We are going to talk to their Customs about a number of issues and one of them is going to be these cigarette making machines. We are not certain that all of them come from China but our best guess is that majority of them come from China,” Finance Secretary Carlos G. Dominguez III told reporters in a briefing last week.

These unregistered cigarette-making machines are usually used to make cigarette products to evade taxation.

“I think they submitted their initial report already,” the BoC Assistant Commissioner of the Post Clearance Audit Group Vincent Philip C. Maronilla told the BusinessWorld on Monday.

In early July, the BoC said when its Chinese counterparts have agreed to “look into the matter” of cigarette-making machine exports to the Philippines.

“We’re trying to get into the gist of this illegal cigarette-making syndicate because we noticed that it’s not only in Luzon, but they’re operating in other areas,” Mr. Maronilla added.

In earlier statements, DoF said the increase in the tobacco excise tax has led traders to resort to smuggling such machinery.

Meanwhile, Undersecretary Mark Dennis Y.C. Joven said at the same briefing that the DoF is scheduled to sign five agreements, two of which will involve BoC. The BoC’s agreements concern cooperation with China Customs and X-ray equipment donations from the Chinese government.

The “cooperation on trade” between the two agencies is expected to address concerns regarding substandard products and invoicing, Maronilla said.

He also said that BoC is finalizing a bilateral agreement between the two agencies for possible joint operations, setting up parameters and common policies to “avoid entry of illicit goods.”

“The third is a Framework agreement between DoF and CIDCA (China International Development Cooperation Agency) which spells out the process wherein we can take out reminbi loans from China. Fourth is the segment of the PNR South Long-Haul line regarding the hiring of a project management consultant and the fifth one involves phytosanitary inspections,” Mr. Joven added. — Beatrice M. Laforga

CTA approves BIR settlement with ABS-CBN unit

THE Court of Tax Appeals (CTA) approved a settlement between ABS-CBN Film Productions, Inc. and the Bureau of Internal Revenue (BIR) regarding the company’s P31-million tax deficiency for 2009.

In a 16-page decision issued on July 31, the CTA first division said both parties have complied with the requirements for the settlement.

The case before the CTA is now deemed “closed and terminated.”

“The Judicial Compromise Agreement entered into by the parties is hereby approved and this Judgement on Compromise Agreement is hereby rendered in accordance therewith. The parties are hereby enjoined to faithfully comply with all the terms and conditions of the aforesaid Compromise Agreement,” the court ruled.

Under the compromise, ABS-CBN Film Productions agreed to pay the BIR P16.1 million.

The agreement called for the film production firm to pay the equivalent to 40% of the basic income tax and basic value added tax as well as 100% of the expanded withholding tax and basic withholding tax on compensation, and basic documentary stamp tax.

The court said the application to settle was grounded on “doubtful validity of respondent’s assessment.”

According to Section 3 of Revenue Regulation No. 30-2002, one of the grounds for doubtful validity is that it is based on presumptions with doubts about its legal or factual basis, or the assessment was based on the “best evidence obtainable,” subject but it can be disputed by sufficient or competent evidence.

The BIR was found to have failed to demonstrate that the company received taxable income from any property, activity, or service equivalent to the tax deficiencies. “Absent any empirical evidence that the alleged differences in the data matching were indeed taxable income received by the petitioner, said deficiency assessments were mere presumptions.”

The court said the memorandum of the petitioner refuted the alleged tax deficiency taxes by presenting evidence during the trial that the assessments were not based on actual facts but “mere presumptions, which is a requisite for compromise settlement under the Tax Code.

The agreement was also approved by the National Evaluation Board which is composed of the BIR and four deputy commissioners, which is also required by the Tax Code.

The settlement was approved by Presiding Judge Roman G. Del Rosario and Associate Justices Esperanza R. Fabon-Victorino and Catherine T. Manahan. — Vann Marlo M. Villegas

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