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Nationwide round-up

Bill filed on benefits for barangay health workers

A BILL seeking to provide compensation and benefits package as well as security of tenure and free education for barangay health workers (BHWs) has been filed by the Makabayan bloc in Congress. House Bill 6562, if passed, will be known as the Barangay Health Workers Act of 2020. “BHWs are among the front-liners in primary health care especially now in the time of COVID-19 (coronavirus disease 2019), as they provide assistance and support to physicians, dentists, nutritionists, public health nurses, and midwives. Their role is indispensable to community health and wellness,” Bayan Muna Partylist Rep. Ferdinand R. Gaite said in a statement on Monday. The bill provides that each barangay should have its own BHWs. The number of assigned BHWs per barangay will be determined by the Department of Health (DoH). The measure also provides that a competency-based education and training curriculum for all BHWs will be developed by the DoH, in coordination with the University of the Philippines (UP). Funding for the benefits and incentives of BHWs will be sourced from the internal revenue allotment for local governments, the tobacco excise tax, and local government income from economic enterprises and local taxes. “They (BHWs) are volunteers that are risking life and limb to save others so it is high time the government reward their sacrifices with higher allowances and benefits,” Mr. Gaite said. — Genshen L. Espedido

Courts limit operations to ‘urgent matters’

THE SUPREME Court (SC) has ordered all courts nationwide to “drastically” reduce operations and attend only to “urgent matters” until April 15 to help curb the spread of the new coronavirus. Administrative Circular No. 31-2020 issued Monday directs courts to just maintain skeleton staff, suspend night courts, and observe office hours only from 9 a.m. to 3 p.m. There will be no work except in court and court offices dealing with resolution of urgent matters and cases, payments of salaries, release of 2019 Bar examination results, medical services, and security of courts. All hearings are suspended except on matters on bail and habeas corpus, promulgation of judgement on acquittals, reliefs of those arrested during the period. Filing deadline within this period is extended for 30 days starting April 16. The Judicial and Bar Council interview for the SC Associate Justice position to be vacated by Andres B. Reyes, Jr. who will retire on May 11, will also be reset. — Vann Marlo M. Villegas

House to form ‘Defeat COVID-19’ committee

THE HOUSE of Representatives will create a “Defeat COVID-19” committee, which will serve as an advisory and coordinating panel to the government’s inter-agency task force on the the coronavirus disease 2019, House Speaker Alan Peter S. Cayetano said. In a live-streamed press briefing on Monday, Mr. Cayetano said the functions of the committee are to submit policy recommendations to departments and other relevant agencies, and to assist in communicating to the public factual and up to date information on the developments relating to the COVID-19 spread. The proposed committee will be composed of members from the committees on health, economic affairs, tourism, trade and industry, labor and employment, banks and financial intermediaries, public information, appropriations, ways and means, local government, and metro manila development. Mr. Cayetano also said that Congress is already coordinating with various departments on ways to fast-track government procurement processes. “We’re looking at all departments, ‘yung existing nilang pondo kung paano po ito makakatulong (their existing funds, on how these can help) during this time. We will make sure that strict procurement process is still followed,” he said. — Genshen L. Espedido

Former communist leader Salas granted bail

THE SUPREME Court has allowed a former communist leader to post bail over his 15 counts of murder charges. In a notice dated March 12, the court’s third division granted the petition of Jody S. Salas, son of former communist leader Rodolfo C. Salas, to allow his father to post a P200,000 bail before a regional trial court in Manila, unless he is being detained for other cases. Mr. Salas was arrested on Feb. 28 over murder charges in 2007. He is accused of being part of the cleansing of ranks of suspected enemies within the local and regional committees of the Communist Party of the Philippines. — Vann Marlo M. Villegas

Postponed

Golf was among the last of the organized sports to shut down due to the novel coronavirus. The Players Championship, long touted to be the pro ranks’ unofficial fifth major event due to its competitive fields and highly regarded home course, actually finished its first round — and with crowds to boot — before being called off. Up until then, United States Professional Golfers Association Tour commissioner Jay Monahan had been adamant in saying the show would go on in light of the varied circumstances under which competitive play occurs.

Thankfully, authorities wised up before any real damage was done. Not long after, other near-term stops on the tour calendar were likewise scuttled. Most prominent among these is the Masters, far and away golf’s premier spectacle. Officials have wisely avoided using the word “canceled” in making the announcement, instead settling for “postponed” to assuage players and fans alike. There is comfort to the choice, certainly, what with its openness to the possibility of normalcy down the line. There is nothing more dramatic than a final-round back-nine charge in front of a frenzied crowd en route to claiming the coveted Green Jacket. And, in turn, there is nothing more disappointing than confirmation of the utter absence of activity in Augusta National.

To be sure, there are logistical hurdles to holding the Masters in abeyance. The pride of Georgia is closed half the year for a reason; weather conditions hamper playability in the summer. Which is why only twice in its history has it hosted the tournament outside of April — but before, and never after. Projecting when the 2020 competition will be held is speculative; assuming community quarantine remains through the next month, the earliest is likely October, when the ryegrass has grown, and when the grounds look as picturesque as always. Before then, odds are low that Club chairman Fred Ridley will allow the gates to open.

Already, living legend Jack Nicklaus has expressed doubts on whether the Masters can be held this year. His sentiments are not unfounded. Unless and until a definitive decision has been made, however, fans aren’t wrong to hope. That said, public safety is paramount. The prospect of foregoing golf at its finest is not a good one, but health concerns trump all others, as even the most diehard followers know.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Another year of single-digit loan growth for Philippine banks due to Covid-19

Philippine banks could see another year of slow loan growth and uptick in nonperforming loans (NPL) as the Covid-19 risk looms over economic growth and financial markets. 

S&P Global Ratings, the world’s leading provider of independent credit risk research, revised its 2020 GDP forecast for the Philippines to 5.8% from 6.2% due to the worldwide spread of Covid-19. This is less of a downward adjustment compared with Asia Pacific countries more exposed to people and supply-chain flows from China. It still has implications for the Philippines banking sector, however. “We expect trade and private investments to slow in the Philippines due to the global coronavirus outbreak, and this will drag on banks’ lending business,” said S&P Global Ratings credit analyst Nikita Anand.

The country’s banks could see a second year of single-digit growth after a long run of double-digit expansions in previous years. In 2019, credit growth slowed to 8.8% compared with 15% in 2018 as corporate loan demand softened due to a delay in passing the national budget and U.S.-China trade tensions. Covid-19’s impact could drag on demand for corporate loans—which make up 82% of the banking system’s loans—and stifle momentum in retail. Retail loans were a key growth driver last year, expanding 16% year-on-year.

Short-term disruptions

The virus outbreak will disrupt travel, hospitality, restaurants, entertainment, and trade sectors short-term. Consumers are likely to avoid public spaces and restrict travel due to the heightened health risk; this, in turn, will hurt consumption spending.

Banking sector NPLs rose to 2.1% of outstanding loans, a 30 basis points (bps) increase during 2019. This was partly due to the large default by Hanjin Industries, as well as a rise in retail loans where credit quality is weaker than corporate loans. NPLs are likely to inch up further this year due to macroeconomic headwinds.

“Banks may offer moratoriums on repayments for badly hit sectors if the health situation escalates, similar to Singapore and Thailand,” noted Ms. Anand.

The local banking industry is believed to be able to manage the risk due to good capital buffers, with an average tier-1 capital adequacy ratio of about 14%. Philippine banks reported an average 20 bps improvement in return on assets to 1.3% in 2019 – despite slower growth – on the back of a 400-bp cut in their reserve requirement ratio and higher trading gains in a falling interest rate environment.

Less vulnerable to Covid-19

The Philippines is less exposed to tourism compared with neighbors such as Thailand and Singapore, where tourism has a large share of the GDP and tourists from China account for a large share of visitors. Tourism-related exports are only 3% of GDP for the Philippines, and less than a fifth of its visitors are from China.

The expected slowdown in global growth, however, could be a blow to trade and private-sector investments in the Philippines. China’s GDP is estimated by S&P Global Ratings to slow to 4.8% in 2020 compared with its pre-outbreak forecast of 5.7%. China contributed 15% of overall trade with the Philippines. Region-wide disruptions to the electronics sector and factory closures in China affecting the supply chain network will slow growth in the Philippines’ manufacturing sector.

There continues to be uncertainty about the rate of spread and timing of the peak of Covid-19, and modeling by epidemiology experts indicates a likely range for the peak of up to June 2020. The global outbreak is assumed to subside during the second quarter of 2020, consistent with the credit risk research provider’s report, “Global Credit Conditions: COVID-19’s Darkening Shadow,” published earlier this month.

Dengue hotspot prediction tool declared global finalist and “Best Use of Data” in NASA Space Apps Challenge 2019

A dengue hotspot prediction tool from Manila won big in NASA Space Apps Challenge, the aeronautical agency’s international hackathon. The initial round was held last October 18-20, 2019 with over 29,000 participants in 71 countries, with De La Salle University (DLSU) as the local host.

Among six global finalists,  Project AEDES was recently awarded “Best Use of Data”, meaning a solution “that best makes data accessible or leverages it to a unique application”. The big data tool utilizes data from climate stations, Google searches, and satellite maps to predict potential dengue hotspot seasons and locations. This way, concerned task force units will be able to properly and efficiently allocate manpower and resources.

Aiming to help address the UN Sustainable Development Goal 3 of “good health and well-being”, the project was inspired by the enormous amount of local dengue cases in 2019, which increased by 92% from the previous year. The tool is an exercise in deriving action from the available wealth of data, which the team argues to be the essence of the Fourth Industrial Revolution.

“It’s not enough to just have data. You also need to generate insight from the data, and more importantly, you have to generate action from the insight. You need those three things for anything to work, and companies struggle with this deceptively simple rule,” said Dominic Ligot, the lead for Project AEDES.

“There are companies who have a lot of data, but they don’t know what to do with it… and then on the flip side, you have decision makers who take action without the benefit of insight and data. You add all of that, and you have the social problems that we have today.”

What’s next for Project AEDES?

In order to make the information as accessible to as many people as possible, the team decided not to put Project AEDES commercially. The goal for now is to bring it to national—and local-level government health departments who can then build on the interface, such as adding an alerts system extension. In order to make the business sustainable, they are open to grants and may also entertain partnerships within the private sector.

In the meantime, Project AEDES has some upcoming plans for the platform, such a public-friendly version and a news enhancement to weed out fake news during “information epidemics”. “We’re building this for public health practitioners. They also have a duty to broadcast data to the public and eliminate fake news,” said Ligot.

The team will also be receiving support from Animo Labs, DLSU’s technology business incubator.

“What we offer… [is] essentially a safe and secure environment where they can do their work properly. That includes data privacy and intellectual property privacy, as well as assistance… that will help them do the work in other support areas so they don’t have to worry about legal, IP, audit, registration, et cetera,” said Federico Gonzalez, executive director at Animo Labs. “We find ways to do that for them so they can focus on what’s important for the project.

Gov’t to boost spending amid outbreak

By Beatrice M. Laforga
Reporter

THE government will boost spending this year including on infrastructure and social programs to shield the economy from the effects of the coronavirus disease 2019 (COVID-19) pandemic, softer global demand, and the Taal Volcano eruption at the start of the year, according to the Budget department.

“Nonetheless, the government will remain prudent with public expenditures to ensure long-term fiscal sustainability,” it said in a statement.

Infrastructure spending more than doubled to a record P177.9 billion in December from P75.6 billion a year earlier, data showed.

This brought total infrastructure spending to P881.7 billion last year, 9.7% higher than a year earlier and bigger than the 859.4-billion target, the Budget department said.

The agency traced the December spike to disbursements by the Department of Public Works and Highways (DPWH) that rose by 86% year on year.

DPWH finished road and bridge projects including the Bayombong-Solano bypass road and Tagum City flyover. It also completed right-of-way acquisitions, bridges, and flood mitigation structures and drainages at the Agno river basin and Cagayan river, the Budget department said.

The infrastructure spending surge was largely due to government “catch-up efforts,” said Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc.

“We all know that the efforts were not enough to breach the 2019 growth target due to historical and perennial low absorptive capacity of government agencies and institutions implementing infrastructure projects,” he said in an e-mail. “Although some have improved, most are still challenged.”

Catch-up measures included a 24/7 work schedule for the construction of big infrastructure projects and streamlining right-of-way acquisitions, the Budget department said.

The economy grew by 5.9% last year, slower than 6.2% in 2018 and missing the government’s revised 6-6.5% goal.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said state spending, which accounts for 11-12% of the gross domestic product, would be one of the biggest growth drivers this year.

Mr. Asuncion said increased infrastructure spending this year is part of the much needed fiscal stimulus to boost the economy amid the COVID-19 global pandemic.

“Infrastructure expenditure is critical and needed at this juncture where demand and supply have been dampened,” he said. “It will help pump-prime the macroeconomy in the next coming months.”

Mr. Ricafort said the outbreak could disrupt logistics and supply chains of various infrastructure projects even if supplies and workers are exempted from the month-long lockdown in Metro Manila.

“Additional spending should be moved forward to help rescue firms hardest hit by the coronavirus spread,” the analyst said.

Central bank seen to cut rates by 25 basis points this week

THE Bangko Sentral ng Pilipinas (BSP) may cut rates anew this week following the move of global central banks to ease policy amid fears of slower economic growth and lower demand for key commodities including oil due to the coronavirus disease 2019 (COVID-19) pandemic.

Twelve out of the thirteen analysts in a BusinessWorld poll held last week expect the Monetary Board (MB) to slash borrowing costs by at least 25 basis points (bps) at their meeting on Thursday, March 19, with some also seeing another 25-bp cut in May.

Policy rate expectations for March 19

The yield on the BSP’s overnight reverse repurchase facility currently stands at 3.75%, while overnight lending and deposit rates are at 4.25% and 3.25%, respectively, following the central bank’s decision to ease borrowing costs by 25 bps at the Feb. 6 policy meeting.

Security Bank Corp. Chief Economist Robert Dan J. Roces said the BSP will go for a 25-bp cut on Thursday amid disruptions due to the month-long lockdown of the National Capitol Region (NCR).

“There are worries of dents to growth that will permeate and that’s mostly from fears of supply chain disruptions, especially with the quarantine of Metro Manila that alone accounts for around 40% of total GDP (gross domestic product),” Mr. Roces said.

After a below-target 5.9% GDP expansion in 2019, the government targets 6.5% to 7.5% economic growth in 2020.

However, the National Economic and Development Authority said earlier this month they expect GDP growth to come in at just 5.5% to 6.5%, as the economy starts feeling the impact of the outbreak, specifically on tourism and trade.

Meanwhile, amid the increasing number of COVID-19 cases in the country, NCR on Sunday began a 30-day “community quarantine” wherein travel by land, domestic air and sea to and from Metro Manila will be banned until April 14.

There were 140 confirmed COVID-19 cases in the Philippines as of March 15, with 11 fatalities recorded.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, meanwhile, said a rate reduction could be on the table this week following global central banks’ move to ease their policy stance due to the virus.

“Another major factor that supports at least a 25-bp cut in local policy rates is the emergency 50 bp [US] Fed[eral Reserve] rate cut that could still prompt other central banks…to also cut rates as well, as part of the global coordinated measures to shore up confidence on both the global economy and financial markets,” Mr. Ricafort said.

The Fed implemented an off-cycle 50-bp cut on March 3 to cushion the economic impact of the COVID-19 outbreak.

Another rate cut from the Fed at their scheduled March 17-18 meeting may trigger a reduction of up to 50 bps from the side of the BSP, said Noelan Arbis, economist at Hongkong and Shanghai Banking Corp. Global Research.

“I think MB will cut policy rates by 50 bps due to the global spread and severity of COVID-19,” University of Asia & the Pacific (UA&P) economist Victor A. Abola said in an e-mail.

BSP Governor Benjamin E. Diokno earlier said another 25-bp cut will be discussed at the MB’s meeting this week, noting the central bank is not ruling out cuts worth 50-75 bps.

So far, the BSP has already slashed rates by 100 bps since 2019, partially reversing the 175 bps worth of hikes implemented in 2018 to temper rising inflation.

The BSP still has monetary space for further easing should COVID-19’s economic impact worsen, said ANZ Research economist Mustafa Arif.

“Falling US yields, low oil prices and tame domestic inflation give the BSP the space for a deeper easing cycle in the rest of 2020, if required,” he said.

Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said a reduction in banks’ reserve requirement ratio (RRR) is “more probable on the table.”

But UA&P’s Mr. Abola said the BSP will opt to keep banks’ reserve ratios at their current levels.

“I don’t think they will cut RRR because policy rate cuts will be more effective in lowering interest rates as the BSP is still paying rates for TDF (term deposit facility) higher than T-bill (Treasury bill) yields,” he said.

After 400 bps in reductions last year, the RRR for big banks now stand at 14%, while those of thrift and rural banks are at four percent and three percent, respectively. — L.W.T. Noble

Property giants to take a hit as Manila malls close

By Denise A. Valdez
Reporter

SOME shopping malls in Metro Manila will be closed starting today, after the government urged mall operators to suspend operations during the month-long “community quarantine” to prevent the spread of the coronavirus disease 2019 (COVID-19).

Listed property companies, which generate significant revenues from mall leasing operations, are expected to take a “huge” hit due to the month-long closure.

“(The) impact of mall closures, in a word: Huge!” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a mobile message over the weekend. “Our analysts are still quantifying exactly how much but foot traffic is the lifeblood of malls. Without people, it’s hard to do business.”

Ayala Land, Inc. (ALI) on Sunday announced it is temporarily closing its 16 malls in Metro Manila “in the interest of health and safety” until further notice.

SM Supermalls, Inc. announced late Sunday all of its malls in Metro Manila will be closed starting today until further notice.

Villar-led VistaMall and Starmalls also announced the temporary closure of its malls in Metro Manila. Vista Mall has four malls, while StarMalls has two — Alabang and EDSA-Mandaluyong.

“Drug stores, home essentials, hardware needs, banks and restaurants will remain open,” VistaMall said in a statement.

Robinsons Land Corp. (RLC) said late Sunday it is temporarily shutting all of its nine Metro Manila malls starting today until further notice.

SM, ALI and RLC said supermarkets, drugstores, convenience stores, banks and other establishments that offer basic services will remain open.

The mall closures are expected to drag the property giants’ bottom line.

ALI generated P22.02 billion in revenues from shopping centers last year, out of the P168.8 billion in total revenues. It has 2.12 million square meters of gross leasable area in its mall network across the country.

For SM Prime Holdings, Inc., revenues from malls stood at P63.63 billion in 2019, representing 54% of total revenues of P118.31 billion. It operates 74 malls in the Philippines with a total gross floor area of 8.5 million square meters, of which 42% are located in Metro Manila.

RLC’s mall operations generated P13.25 in revenues for 2019, comprising 43% of the company’s total revenues of P30.58 billion. It has 52 malls in its portfolio with 1.57 million square meters of gross leasable area.

“Recurring income from their malls provide a significant portion of the bottom line for some of our major property developers. This is expected to greatly hit their income for the first half of 2020,” Trader Gab L. Magsino said in a text message.

Trade Secretary Ramon M. Lopez told reporters yesterday that the interagency task force will be meeting on Monday for the guidelines on mall operations. He added that the “econ(onomic) cluster will announce (a) government support package” by today, but the details of which he refused to preempt yesterday.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said mall operators and retailers may see an upside as consumers resorted to “panic buying” ahead of the lockdown.

“For those malls, there will be an impact but it’s hard to calculate. On the one hand some retail will be affected if they deal with non-essentials, but since these developers have groceries, drugstores and essential appliances, the surge in sales will offset the slump in others,” he said in a mobile message.

Pending the government’s final guidelines on restricting mall operations, other mall operators have adjusted operating hours to close shop at 7 p.m.

Coronavirus fears expected to spur more stock market volatility

CORONAVIRUS DISEASE 2019 (COVID-19) fears are expected to spur more volatility in the already bearish stock market, as Metro Manila starts the first work week under “community quarantine.”

Last week’s bloodbath saw the Philippine Stock Exchange index (PSEi) plunge over 10% during intraday trading on Thursday and Friday, triggering the circuit breaker for the first time since October 2008. The PSEi recovered slightly on Friday, closing up 1% to 5,793.94.

For Philstocks Financial, Inc. Research Associate Claire T. Alviar, Friday’s rebound may not be indicative of a market’s recovery as worries over the COVID-19’s economic impact persist.

Metro Manila on Sunday began a month-long lockdown that also banned mass gatherings, as well as land, domestic air and sea travels to and from the region.

“Although goods and services will continue to flow and no disruption of supply is expected by the government, the demand for unnecessary goods and services might drop since the public is avoiding crowded places,” she said in a text message.

“Negative sentiment will further rise in the market due to the expected lower demand from the public which will eventually hurt businesses’ earnings,” she added.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said investors are reacting to each development on a day-to-day basis.

“All sectors are vulnerable. At a situation like this, it is hard to guess where people will be allocating their resources,” he said in a mobile message over the weekend.

Amid panic selling in the stock market, Ms. Alviar said the most vulnerable are airlines — PAL Holdings, Inc. and Cebu Air, Inc.

The direct impact of cancelled flights, travel bans and lower tourist arrivals to the airlines’ earnings is unavoidable, she said.

“(What) they can only do is reduce costs by layoffs or cut pay, while the lower oil prices will also help to mitigate some losses,” Ms. Alviar added.

PAL Holdings has already announced layoffs affecting around 300 workers, while senior management officials of Cebu Pacific have decided to take a pay cut as the virus outbreak hurts operations.

PNB Securities, Inc. President Manuel Antonio G. Lisbona said oil and energy stocks may also fall amid slowing demand.

He said the month-long community quarantine in Metro Manila will hurt mall operators and restaurant chains, as people avoid going out and forced to stay at home.

Mr. Lisbona said property firms are also vulnerable due to the slowing demand from the Chinese market.

Ms. Alviar also noted companies in the tourism sector, as well as casinos and gaming, may see slower earnings, amid a drop in both domestic and foreign tourists.

Companies with export demands involving China are also seen to take a hit, Ms. Alviar said.

“Since many were likely caught unable to sell given the suddenness of the drop, I would advise to take advantage of any rallies to lighten up their portfolios and raise liquidity and buy back at some later date,” Mr. Lisbona said in a mobile message.

While the market may remain volatile, he said Philippine stocks may see a spillover from the gains in the US market last Friday. “On the whole, smaller markets will move in alignment with the major markets particularly the US,” he said.

For Philstocks’ Ms. Alviar, it is best to sell on rally and secure gains for now. “We think that (investors should) start to accumulate shares only when the virus cases subside,” she said.

She noted investors may snap up stocks of food manufacturers and grocery retailers for now as these offer essential goods and may “benefit” from the public’s panic buying.

For Diversified Securities, Inc. Equity Trader Aniceto K. Pangan, investors should also look for companies with low valuation and buy only on market weakness.

“Investors should also avoid listed companies with high debt exposure that are above industry level as this will be hit hard by this situation,” he said in a text message. — Denise A. Valdez

Policy rate expectations for March 19

THE Bangko Sentral ng Pilipinas (BSP) may cut rates anew this week following the move of global central banks to ease policy amid fears of slower economic growth and lower demand for key commodities including oil due to the coronavirus disease 2019 (COVID-19) pandemic. Read the full story.

Policy rate expectations for March 19

Outsourcing firms told to prepare flexible work schemes amid virus

By Jenina P. Ibañez
Reporter

AN outsourcing business group has advised companies to implement flexible work arrangements amid the new coronavirus (COVID-19) disease outbreak.

In a statement on Saturday, the Information Technology and Business Process Association of the Philippines (IBPAP) said that it was working with government and health agencies to help prevent further transmission of the disease and ensure the safety of the outsourcing workforce.

“Please evaluate applicable variations of flexible work arrangements such as compressed workweek, staggered start of shifts, and skeletal on-site workforce,” IBPAP President and Chief Executive Officer Rey C. Untal said, citing the labor advisory released by the Department of Labor and Employment on March 4.

He said that this would minimize stress on public transportation during rush periods.

Metro Manila has been placed on a month-long community quarantine that limits the movement of people. Workers may enter and exit Metro Manila by showing their company ID at checkpoints.

There are over 900,000 business process outsourcing employees working in Metro Manila.

Mr. Untal said that employees that work in economic zones may work from home, bringing home work laptops to avoid unnecessary travel.

The Philippine Economic Zone Authority (PEZA) on March 5 released a memorandum circular allowing information technology enterprises in economic zones to develop work-from-home arrangements or reassign employees to other facilities without prior approval from PEZA.

IBPAP is also encouraging member companies to provide alternative transportation for employees.

“There will be a huge challenge to implement social distancing within our mass transport systems and as such, member companies will be assessing the feasibility of providing their employees with alternatives to public transportation to and from work like shuttle services with dedicated pick-up points so as to lessen the risk of exposure.”

Mr. Untal said that IBPAP encourages its member companies to implement these measures to protect employees, clients, and other stakeholders for the duration of the community quarantine.

President Rodrigo R. Duterte on Thursday ordered a community quarantine halting land, domestic air, and sea travels to and from Metro Manila from March 15 to April 14.

Tax court denies JG Summit move on P1.3-B assessment

By Vann Marlo M. Villegas
Reporter

THE Court of Tax Appeals (CTA) denied for lack of jurisdiction the petition of JG Summit Holdings, Inc. to cancel the P1.3 billion tax liabilities assessed by the Bureau of Internal Revenue (BIR).

In a 17-page petition on March 12, the court’s second division said the time for the filing of an appeal against its assessment to the court has already lapsed.

Section 228 of the Tax Code states that if a protest before the BIR is denied in whole or in part or not acted upon 180 days from submission of documents, a taxpayer may appeal to the CTA within 30 days.

Revenue Regulation 12-99 says that if a protest is denied, the taxpayer may appeal to the court within 30 days upon receipt of the decision or the assessment will become final. If the taxpayer raised the assessment to the BIR commissioner in 30 days upon receipt of the decision by the BIR authorized representative, this is to be decided by the commissioner.

The court said that the commissioner denied the petition of JG Summit through a final decision on disputed assessment (FDDA) received on Dec. 5, 2014. The holding firm filed a motion for reconsideration with the commissioner instead of filing a protest to the court.

The BIR maintained the denial of the protest of JG Summit through a revised FDDA dated Aug. 20, 2015, which was then raised to the court.

“With the procedure of appeal already clearly laid down, a resort to a request for reconsideration (with the CIR) did not then toll the running of the reglementary period within which petitioner’s appeal must be elevated to this Court,” the court decision penned by Associate Justice Jean Marie A. Bacorro-Villena read.

The court noted that more than nine months have lapsed from the petitioner’s receipt of the FDDA before it was brought on appeal to the CTA.

It also said that in the FDDA, the holding firm was already notified by the BIR of its available remedies, which is to appeal before the CTA or through a motion for reconsideration to the commissioner.

“Petitioner made its choice and could not now avoid the consequences of such choice,” the court said.

JG Summit was assessed for liabilities of P6.55 billion under its FDDA. When appealed, the BIR issued the revised FDDA, which was protested before the court, for deficiency income tax of P581.9 million, value-added tax of P202.6 million, and documentary stamp tax (DST) of P555.3 million as it paid its other deficiencies.

It was also assessed for improperly accumulated income earnings tax (IAET), 50% surcharge, 20% deficiency and delinquency interest pursuant to the Tax Code.

The holding company claimed that it had timely filed the petition, the right to assess it had already prescribed, and the findings of the BIR were erroneous.

It said that the BIR wrongfully disallowed its interest expense, its interest income from loans to its affiliates are not subject to VAT as it is not a lending institution, the revised FDDA disallowed excess tax credits carried to succeeding years, there is no legal basis in finding it liable to DST, and is not subject to IAET as it is a publicly held corporation.

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