How PSEi member stocks performed — December 6, 2019
Here’s a quick glance at how PSEi stocks fared on Friday, December 6, 2019.
BoC asserts right to acquire cargo undervalued by 30% or more
THE Bureau of Customs (BoC) has issued an order asserting its authority to acquire imported goods whose value is underdeclared by at least 30%.
According to Customs Administrative Order (CAO) No. 16-2019, the Commissioner will have the “sole authority” to resort to compulsory acquisition if the shippers declare an “unconscionably low” value for Customs purposes.
“A commodity is valued unconscionably low when the Bureau, after applying all the methods of valuation, still finds a discrepancy of at least 30% in the value declared as against other references,” according to the order.
Under current law, the state has the right of compulsory acquisition through the Customs Commissioner to “acquire imported goods under question for a price equal to their declared customs value plus any duties… on the goods.”
The measure is meant to protect government revenue against undervaluation of goods, it said.
A notice of compulsory acquisition (NCA) which serves as the preliminary order, will be issued upon identifying that the goods are undervalued to the specified extent.
This will be followed by a warrant of compulsory acquisition (WCA), informing the importer that the commissioner is set to acquire the goods in cash for the declared customs value plus paid duties, within 10 days of the WCA issuance.
The acquired goods may be disposed of through a public auction, negotiated sale or other methods allowed by law.
The importer has a 20-day period to appeal the decision to the Secretary of Finance and will be given another 30 days to appeal to the Court of Tax Appeals.
The CAO, dated Nov. 5, was published on the bureau’s website over the weekend and will take effect 30 days upon its publication in a national newspaper.
The CAO serves as the implementing rules and regulations (IRR) of section 709 of Republic Act No. 10863 or the Customs Modernization Tariff Act (CMTA), which was signed in May 2016. — Beatrice M. Laforga
Nickel ore output seen at 40-50 million MT in 2020
THE Philippine nickel industry expects expanded production next year to fill the gap left by Indonesia’s nickel ore export ban to between 40 and 50 million wet metric tons (WMT) of ore, possibly accompanied by higher prices due to supply concerns.
“It’s more than 40 million tons, but let’s say, whether it exceeds 50 million tons, I doubt,” Philippine Nickel Industry Association (PNIA) President Dante R. Bravo told reporters on the sidelines of the group’s year-end report news conference in Quezon City.
“That would depend basically on the prices, particularly for the lower grades because that is where the added volume would be coming from. I think, for medium and higher grades we have limited volume on these,” he added.
According to the Mines and Geosciences Bureau (MGB), production of nickel ore in the first half was 11.306 million dry metric tons (DMT) or about 17.395 million wet metric tons (WMT), valued at P12.24 billion.
For 2019, Mr. Bravo said that production could hit about 39 million WMT, equivalent to 25 million to 26 million DMT.
Indonesia has banned the export of nickel starting 2020, in a bid to develop a domestic processing industry that would capture more value-added from the nickel trade. The ban was announced on Sept. 2, bringing forward an earlier announced ban that was scheduled for 2022.
“Because of the Indonesian export ban, we expect that there will be ramp-up of production for ore exports,” Mr. Bravo said.
“Likely, there is going to be an increase in the price of ore because there is a shortage of ore,” Mr. Bravo said.
“When the price is a bit high… if you can make money, you can go a longer way to mine and that could increase the volume,” he said.
Mr. Bravo noted that the US-China trade war may still pose a great challenge for the industry.
“It makes everybody uncertain in terms of foreign exchange, in terms of economic growth, in terms of foreign direct investment,” he said. — Vincent Mariel P. Galang
PPA completes upgrade of Davao del Sur seaport
DAVAO CITY — The P550-million Malalag Port Development Project in Davao del Sur has been completed, upgrading the cargo facility for the south of the Davao Region, the Philippine Ports Authority (PPA) said over the weekend.
In a statement, PPA said among the goods that are expected to pass through the seaport are “molasses, sugar, steel products, vehicles and heavy equipment.”
Davao del Sur is considered the center of sugar production in the region, and also produces coconut, rice, mango, and banana, among other agricultural commodities.
The port is located about 25 kilometers from Digos City, the capital of Davao del Sur, and 88 kilometers from Davao City.
Davao City Chamber of Commerce and Industry, Inc. President Arturo M. Milan said the modernized facility will help develop not just the region but also neighboring provinces.
“It will be easier for them (local producers and traders) to move their goods,” Mr. Milan told BusinessWorld.
In June 2017, the Malalag municipal government returned the operations of the port to the PPA.
The facility was handed over to Malalag following the passage of the Local Government Code in 2001, which specified the devolution of some national functions.
The upgrades include the construction of a new wharf, access trestle, back-up area, improvement of the old back-up area, and the installation of a lighting system.
Aside from Malalag, the PPA operates three other ports in the region: Sasa and Sta. Ana in Davao City, and one in Mati City, Davao Oriental. — Carmelito Q. Francisco
Japan loan worth P2 billion expected soon for bridge upgrades
A P2-billion loan from Japan is set to be signed “in the coming months” to fund earthquake resilience improvements for key bridges in Metro Manila, the Department of Finance said.
In a statement Saturday, Finance Secretary Carlos G. Dominguez III told Hiroto Izumi, head of a Japanese delegation at a meeting held near Tokyo, that the Philippines and Japan are “ready to sign the 4.409 billion yen supplemental loan agreement for the Metro Manila Priority Seismic Bridge Improvement Project in the coming months.”
The Japan International Cooperation Agency (JICA) has said that the project will enhance the seismic resilience of Lambingan and Guadalupe bridges in Metro Manila, which are expected to be completed by 2022.
Lambingan bridges the Pasig River between Manila and Mandaluyong while Guadalupe is the Pasig river crossing along EDSA, Metro Manila’s most heavily-trafficked circumferential road.
During the ninth high-level meeting of the Philippines-Japan Joint Committee on Infrastructure Development and Economic Cooperation, the two officials signed a memorandum of cooperation (MoC) that formalizes Japan’s commitment to provide technical support in drafting a master plan for Subic Bay Freeport.
Last month, DoF said that Japan has agreed to support the proposed master plan, which will develop possible projects to boost economic activity in the Subic Bay area.
The meeting discussed the implementation of Japan-funded infrastructure projects, in which Japan committed “to extend additional technical assistance that are critical to the Philippines’ campaign to bridge the infrastructure financing gap,” on top of its existing loan agreements.
The Finance department said that the two sides will work on the exchange of notes and the loan agreement for an additional loan to fund the ongoing Davao City Bypass Construction Project (DCBCP).
The two also promised to hasten arranging the Central Mindanao Highway Project (Cagayan de Oro-Malaybalay Section) as a candidate for the Japanese official development assistance.
In addition, DoF said Japanese officials also expressed interest in conducting the pre-feasibility studies of the four priority projects — the Cebu Circumferential Road, the Second San Juanico Bridge and Access Road, the Central Mindanao Highway (Cagayan de Oro-Malaybay Section) as well as the Agusan del Norte-Butuan City Logistical Highway (also known as the fourth Butuan Bridge).
They also discussed other “loan financing arrangements for the Philippines as it transitions to an upper middle-income country status ahead of schedule in 2020.”
The Japanese officials reiterated their interest in providing loans for the Cebu-Mactan Bridge and Coastal Road Construction Project and additional technical aid to the Bangsamoro Transition Authority and the rehabilitation of the most affected areas in Marawi City. — Beatrice M. Laforga
GSIS hoping for full insurance cover for public schools
THE government pension fund said it hopes to finally reinsure public school buildings against calamities when it auctions off the reinsurance contract for the National Indemnity Insurance Fund on Wednesday.
In an interview with BusinessWorld, Government Service Insurance System (GSIS) Vice-President Leopoldo A. Casio, Jr. said that the auction could result in full coverage of school buildings and property controlled by the Department of Education (DepEd).
“This is for DepEd schools because these are uninsured at the moment. DepEd schools are uninsured because of budgetary constraints,” he said.
“The opening of bids will be on Dec. 11 and hopefully the international reinsurers will bid because this is such a large program for the government,” he added.
Mr. Casio said insurance for schools has long been an issue because the properties are worth billions. He added, “It will help in terms of liquidity on the part of DepEd and the restoration of schools will be faster, (because it eliminates the need for) asking the government for additional funding.”
Administrative Order No. 33 issued by Former President Corazon C. Aquino in 1987, requires all departments to insure their physical assets with GSIS against calamities.
“All heads of department, commissions, boards, bureaus, offices of the national and local governments concerned except municipal governments below first class, government-owned and/or controlled corporations, subsidiaries and acquired asset corporations shall secure from the General Insurance Fund directly, all insurances or bonds covering properties, contracts, rights of action and other insurable risks of their respective offices, including all those in which their respective offices have an insurable risk and all those in which they have an insurable interest only,” according to the order.
According to a 2013 Commission on Audit (CoA) report, P6.85 billion worth of public school buildings and other Dep-Ed-owned properties were uninsured despite the AO requiring them so.
The National Indemnity Insurance Fund will also be used to finance risk insurance of roads and bridges built by the Department of Public Works and Highways (DPWH). — Gillian M. Cortez
CTA denies Duty Free appeal of tax refund ruling
THE Court of Tax Appeals (CTA) denied for lack of merit the appeal of Duty Free Philippines Corp. of an earlier ruling dismissing its P142.9-million tax refund claim.
In a three-page resolution dated Nov. 8, the court’s special first division reiterated that both Duty Free and the Bureau of Internal Revenue are public entities, with any disputes subject to the jurisdiction of government lawyers.
“Thus, Sections 66, 67, and 68, Chapter 14, Book IV of Executive Order (EO) No. 292, otherwise known as the Administrative Code of 1987, and the doctrinal pronouncement of the Supreme Court in the PSALM (Power Sector Assets and Liabilities Management Corp.) case interpreting the said provisions, apply,” the court ruled.
“Such being the case, the subject dispute or claim falls under the jurisdiction of the Secretary of Justice, and not of this Court,” it added.
The court on May 30 ruled that Duty Free is considered as an attached agency of the Department of Tourism under Republic Act 9593.
It also ruled that under EO 292, all disputes, claims and controversies between government agencies involving questions of law should be settled by the Secretary of Justice.
Under the EO the Office of the Solicitor General (OSG) is authorized to settle cases involving government offices to whom it acts as principal law office and cases involving both questions of law and fact. The Department of Justice will handle cases not falling under the OSG.
The court also ruled that it does not agree with the contention of Duty Free that the court can still entertain the case as it was filed before the Supreme Court promulgated the PSALM ruling.
The PSALM ruling found that under Presidential Decree No. 242, all disputes and claims solely between government agencies and offices must be settled by the Secretary of Justice, the Solicitor General or the Government Corporate Counsel depending on the issues and agencies involved.
The CTA said that the interpretation of the provisions of PD 242, which is now in EO 292, “constitutes as part thereof as of the date of its enactment, not at the date when the PSALM case was promulgated.
“Thus, at the onset of the instant case, this Court no longer has jurisdiction to entertain the same,” it said.
“Wherefore, premises considered, the instant Motion for Reconsideration is denied for lack of merit,” it added.
Duty Free filed its petition for review on March 15, 2017 over the Bureau of Internal Revenue’s alleged inaction on its claim for the refund of allegedly erroneously assessed and collected value-added tax for 2015.
The decision was written by Associate Justice Erlinda P. Uy and concurred in by Roman G. del Rosario. — Vann Marlo M. Villegas
DoLE commits to managing transition to greater automation
THE Department of Labor and Employment (DoLE) said it will work to help industries better manage the transition to increased automation, including “social dialogue” which could help mitigate employment disruptions accompanying the so-called fourth industrial revolution (4IR).
“The labor department has underscored the importance of developing and implementing labor and employment policies and programs based on sound research,” DoLE said in a statement Sunday.
DoLE recently held its 8th DOLE Research Conference, centered around “Shaping the Discourse on the Future of Decent Work.” At the conference 14 research papers were presented, from which DoLE concluded that automation presents opportunities and should not be seen solely as a potential job killer.
“How we deal with it, how we adapt to it, and how we harness its positive potential, will shape the future of work,” according to Labor Officer-in-Charge Assistant Secretary Dominique R. Tutay in the statement.
The conference was conducted by DoLE’s Institute for Labor Studies (ILS).
In June during the International Labor Organization (ILO) Conference, Labor Secretary Silvestre H. Bello III spoke of the need to upskill workers to make stay relevant during the 4IR.
“The main task at hand right now is to craft specific policy responses that affirm our human incomparability and assert the import of tripartism and social dialogue,” he said in his ILO speech. — Gillian M. Cortez
Act fast before the FAST Act interferes with US Passports
This article applies to US citizens, US nationals and their employers, the latter to ensure US Federal tax compliance. “Seriously Delinquent” tax debts can cause suspension, denial, or nonrenewal of US Passports.
The US passport is said to be one of the most powerful in the world. Its holders enjoy visa-free access or visa-on-arrival access to almost 200 countries. For an American who lives overseas, the US passport is even more important as it may be the only valid proof of identification in the host country. Furthermore, a US passport may be the only acceptable ID document when entering into any legal transactions, such as signing a lease agreement or an employment contract or opening a bank account.
However, what if this powerful passport were rendered useless, revoked or refused renewal due to tax compliance issues?
On Dec. 4, 2015, former President Barack Obama signed into law the Fixing America’s Surface Transportation (FAST) Act. The Act provides funds for Federal highways, highway safety and transit programs, and related needs. To help cover the costs involved, it added a new Internal Revenue Code (IRC) section (Section 7345) that allows the Internal Revenue Service (IRS) to work with the State Department to revoke, deny, or limit the passport of any taxpayer with a “seriously delinquent tax debt.”
This procedure has raised an estimated $1 billion so far — considerably more than the anticipated $400 million. Given this level of success, we can expect the IRS to continue using passport suspensions, denials, and non-renewals to motivate taxpayers to settle tax compliance issues.
WHO ARE THE FAST ACT’S TARGETS?
The operative phrase here is “seriously delinquent tax debt.” Under the Act and the IRS’s implementing guidelines, this refers to an individual’s unpaid, legally enforceable Federal tax liability of at least $52,000, including interest and penalties, as formally assessed by the IRS. Also, IRS must have already filed a notice of lien, issued a levy on the taxpayer’s assets, or the taxpayer must have either exhausted administrative appeal rights or allowed them to lapse.
So, when is a tax debt not considered seriously delinquent? The FAST Act clarifies that debts that are being paid in a timely manner in accordance with an IRS-approved offer in compromise or installment agreement are not considered seriously delinquent. Tax cases for which a due process hearing has been filed or is pending or that are subject to a claim that can result in a zero balance are also not included. IRS rules also have certain compassionate provisions that exempt taxpayers who have filed for innocent spouse relief or for personnel who are currently serving in a combat zone.
IRS rules also allow for discretionary exemption (which means IRS may or may not allow an exemption) in cases involving financial hardship or identity theft, for taxpayers in federally-designated disaster zones, bankrupt individuals, or for deceased taxpayers.
WHAT HAPPENS IF A TAXPAYER’S PASSPORT IS AT RISK?
If the taxpayer’s debt is seriously delinquent and none of the exceptions or discretionary exclusions apply, the IRS will send a certification that the taxpayer’s passport is subject to suspension or non-renewal to the Treasury Secretary who then forwards that certification to the Secretary of State. Concurrently, the IRS will notify the taxpayer of this action at his or her last known address.
To contest a certification, a taxpayer may file suit in a US district court or the US Tax court.
Given the expense and time involved in litigation, a recent IRS Notice may provide a more attractive option for taxpayers who act fast. If the State Department receives a passport application from a certified delinquent taxpayer, it will now inform the taxpayer and hold the application for 90 calendar days instead of immediately rejecting it. This provides time for the taxpayer to contact the IRS and request a decertification by convincing the IRS that the certification is in error, by settling the tax liabilities in full, or by entering into an offer in compromise or installment payment agreement with the IRS.
Affected taxpayers should bear in mind that the $52,000 threshold for 2019 is not difficult to breach. Under the general statute of limitations for federal taxes, the IRS usually has just three years from the due date of a return or, if later, from the actual filing date to assess additional taxes. However, this limit becomes six years in cases where there is a substantial understatement of income (i.e., omission of over 25% of gross income). The statute is unlimited in cases where the understatement is fraudulent or where the taxpayer has failed to file. The statute of limitations is also unlimited if the taxpayer fails to include certain forms related to foreign assets when required. Since the time frame to calculate liabilities can run from three to an unlimited number of years, the tax plus interest and penalties can easily add up to $52,000 or more.
ACT FAST TO PROTECT YOUR US PASSPORT
Anyone who receives a notice from the IRS or State Department of a seriously delinquent tax debt or who is certified for passport denial or limitation must act quickly. Affected US passport holders who have been identified as delinquent taxpayers should immediately consult a tax advisor and resolve any tax compliance issues before the FAST Act takes away their passport.
It should be noted that an application to renew an expiring US passport can be submitted up to nine months before its expiration date. Passport holders who have any inkling of a pending tax problem should file their renewal as early as possible to give themselves and their advisor time to work out a solution.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. Any tax advice contained herein may be insufficient for US penalty protection. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Jocelyn M. Magaway is a tax senior director and IRS enrolled agent of SGV & Co.
PHL set for best SEA Games finish
By Michael Angelo S. Murillo
Senior Reporter
THE PHILIPPINES is now near surpassing its best finish in the Southeast Asian Games as it continued to add to its gold medal haul on Sunday.
As of 6 p.m. yesterday, the country has already accumulated 104 gold medals in the ongoing biennial regional sporting meet, just nine away from the 113 gold mints the Philippines got in 2005 where it finished first overall.
The 101 golds the host already had actually were more than the 91 the country earned in 1991 in the Games held here as well.
Among the gold medal sources yesterday were softball, surfing, skateboarding and baseball.
The Blu Girls, the country’s women’s national softball team, picked up their 10th SEA Games gold by way of a sweep to continue their unbeaten run in the biennial meet. They routed Indonesia, 8-0, in the final.
The team was powered by Cheska Altomonte, Garie Blando, Mary Ann Antoleh Hao, Ezra Jalandoni, Lyka Basa and Kikay Palma, among others. They have won SEA Games golds in 1979, 1981, 1987, 1991, 1997, 2005, 2007, 2011, 2015.
“Of all the softball titles by the Blu Girls this is the easiest and the sweetest,” said team manager Randy Dizer after their latest feat. “It’s because we played in our home court, that’s the biggest thing.”
Hero surfer Roger Casugay, meanwhile, won the gold in the men’s longboarding category.
Mr. Casugay created news at the weekend after he helped a rival surfer who had trouble in the waves of Monalisa Point beach in La Union after his surfer’s leash broke.
The Filipino surfer has gotten a lot of praise for showing the traits that embody true sportsmanship and is set to be recognized as well for his commendable deed when athletes are presented and awarded in Malacañang after the Games.
In skateboarding, after two runner-up finishes in the Games previously — Game of S.K.A.T.E. and skateboard street — Christiana Means finally had a golden breakthrough, winning in the women’s skateboard park category.
Ms. Means had total points of 11.20, ahead of Indonesians Nyimas Cinta (10.76) and Neepa Pramesti (8.10), who took silver and bronze, respectively.
The men’s baseball team, meanwhile, gifted the Philippines another gold after defeating Thailand, 15-2, in the finals on Sunday in Pampanga.
RECORDS BROKEN
Meanwhile, records were broken in SEA Games athletics on Dec. 7.
Filipino-foreigner female track athlete Kristina Knotts and Olympics-bound pole vaulter Ernest John Obiena rewrote SEA Games history with their impressive showing in athletics action that happened at the New Clark City Oval Stadium in Capas, Tarlac.
Running in lane No. 4, Ms. Knott accelerated in the homestretch and pulled away in ruling the women’s 200m event in a record-breaking time of 23.01 seconds.
Her time broke her own record of 23.07 set earlier in the day in the qualifiers and 18-year-old SEAG record of 23.30 seconds set by Thai Supavadee Khawpeag in the 2001 Malaysia Games.
It also surpassed the national record set by Philippine athletics legend Lydia de Vega of 23.50 in a meet held in Walnut, California, 33 years ago.
Making no secret of her Olympic aspirations, Ms. Knott likewise came within striking distance of the qualifying time of 22.80 seconds for the 2020 Tokyo Games.
Mr. Obiena, for his part, handily clinched his pet event in clearing 5.45 meters for the gold, which also went down as a new SEA Games record.
It surpassed the previous mark of 5.35 meters of dethroned Thai champion Porranot Purahong, who was relegated to the silver (5.20) while Malaysia’s Iskandar Alwi (5.00) took the bronze.
After sealing the gold at 5.45 meters, Mr. Obiena, whose national record is 5.81 meters, attempted at 5:55 but failed thrice, after which he waved at the stands to the ovation of the appreciative hometown crowd of around 6,000.
Gilas battles Indonesia in SEA Games semifinals
AFTER SWEEPING all three of its preliminary matches in the 30th Southeast Asian Games, the Philippine men’s national basketball team takes its campaign to a higher level as it battles Indonesia in the semifinals today at the Mall of Asia Arena.
Went 3-0 in group play, Gilas Pilipinas took the top spot in Group A to set up a Final Four encounter with Group B second-seed Indonesia, coached by former Philippines coach Rajko Toroman.
The Philippines, which has had a stranglehold on the SEA Games event, winning gold 17 times out of 19 in the biennial regional sporting meet, as expected has been dominant in the ongoing edition of the Games.
The Tim Cone-coached All-Philippine Basketball Association squad defeated Singapore, Vietnam and Myanmar in group play with an average winning margin of 54 points.
Gilas played last Myanmar on Dec. 7, winning, 136-67.
Matthew Wright of the Phoenix Pulse Fuel Masters led the Gilas juggernaut over the Burmese squad, finishing with a game-high 29 points, 24 coming from beyond the arc.
Vic Manuel of the Alaska Aces had 24 points and 11 rebounds while Troy Rosario of TNT KaTropa added 16 points and nine boards.
Marcio Lassiter of the San Miguel Beermen, meanwhile, had 15 points, all coming from three-point land to go along with five assists.
“We wanted to find balance in the game and I think we found it as the game progressed,” said Mr. Cone following their victory over Myanmar, in a game that saw five-time PBA most valuable player June Mar Fajardo and Stanley Pringle not play.
Looking to deal the Philippines its first defeat in the tournament is Indonesia, which finished second in Group B with a 2-1 record.
It is coming off a 100-71 victory over Cambodia in its last game on Dec. 7.
Andakara Prastawa led the Indonesians in the win with 14 points.
The winner between the Philippines and Indonesia takes on the victor in the other semifinal pairing of Thailand and Vietnam in the finals set for Tuesday, Dec. 10. — Michael Angelo S. Murillo
Columbian gets Go and Adams; Suerte to Blackwater
THE COLUMBIAN Dyip selected a pair of big men in the annual Philippine Basketball Association rookie draft held on Sunday at the Robinson’s Place Manila.
Columbian first picked Ateneo center Isaac Go in the special Gilas Pilipinas draft then selected Filipino-American Roosevelt Adams in the regular draft.
Mr. Go, who helped the Blue Eagles to a three-peat in the University Athletic Association of the Philippines before leaving, will be on loan to the Gilas program in preparation for the 2023 FIBA World Cup but has his rights with Columbian.
Selected second in the five-player Gilas draft was University of the East’s Rey Suerte (Blackwater Elite), followed by Ateneo’s Matt Nieto (NLEX Road Warriors), San Sebastian’s Allyn Bulanadi (Alaska Aces) and Ateneo’s Mike Nieto (Rain or Shine Elasto Painters).
Picked second in the regular draft after Mr. Adams was Fil-Am Maurice Shaw (Blackwater). Mike Ayonayon (NLEX), Barkley Ebona (Alaska) and Adrian Wong (Rain or Shine ) complete the top five.
The Elasto Painters then selected Clint Doliguez and Prince Rivero for the sixth and seventh picks, respectively, after which Northport Batang Pier picked Sean Manganti (eighth), Aris Dionisio at ninth to Magnolia Hotshots Pambansang Manok, and Arvin Tolentino at 10th to the Barangay Ginebra San Miguel Kings.
Completing the first round of the regular draft were Kib Montalbo at 11th to the TNT KaTropa and Christian Balagasay at 12th to Columbian. — Michael Angelo S. Murillo