Shares close
flat on profit taking
Joel Francis Guinto
INQ7.net
SHARE prices closed flat on Tuesday amid profit taking, with
investors' sentiment dampened by a surge in inflation,
dealers told INQ7.net. The composite index closed 1.02 point
or 0.06 percent higher at 1,590.95 on volume of 709.22
million shares worth 370.03 million pesos.
In the broader market, gainers outnumbered losers 35 to
29 while 45 stocks were unchanged. Philippine Long Distance
Telephone Co. (PLDT) was top traded. It closed five pesos
higher at 1,225 on volume of 60,860 shares. "Investors are
staying on the sidelines, selling on any strength but not
buying," DA Securities president Nestor Aguila said. "The
market has risen so strongly before the inauguration of
President Gloria Macapagal-Arroyo and (Tuesday's decline) is
due to a technical correction," Aguila added.
Before the market opened, the National Statistics Office
(NSO) announced inflation in June accelerated to 5.4
percent, compared with 4.7 percent in May. The figure was
based on 2000 prices. Based on 1997 prices, inflation rose
5.1 percent in June.
|
Financial regulators yesterday agreed to establish a common
regulatory and supervisory framework against fraudulent
practices and transactions.
Through a memorandum of agreement, Bangko Sentral ng
Pilipinas (Central Bank of the Philippines, or BSP), Securities
and Exchange Commission (SEC), Insurance Commission, and
Philippine Deposit Insurance Corp. formed the Financial Sector
Forum, which would help them oversee financial deals.
"The forum is essentially a voluntary cooperative endeavor of
the concerned agencies to provide an institutionalized framework
for coordinating the supervision and regulation of the financial
system, while preserving each other's mandate," BSP Governor
Rafael B. Buenaventura said. He also stressed the forum was not
a regulatory superbody.
"However, understandings reached by the forum are expected to
be implemented by the member agencies in the interest of
enhancing the overall supervision process," he said. He also
said the forum would focus on "identifying and filling in the
gaps and eliminating overlapping functions in the current
supervisory regime."
It would also improve reporting and information dissemination
processes among different agencies. And this would need
comprehensive rules on disclosure and a harmonized regulatory
reporting. The agencies will also establish database linkages to
facilitate faster, more accurate transfer of information.
Mr. Buenaventura said the forum would also undertake
initiatives on consumer protection and education to curb
unlawful and unethical business practices. PDIC president
Ricardo M. Tan said the forum would enhance coordination among
the different agencies. Regulators are also stepping up efforts
to strengthen the country's capital market.
-- I. C. C. Gonzales |
By JENNIFER A. NG, Reporter
The Asian Development Bank (ADB) has established a $3-million
trust fund to assist developing member-countries in their fight
against money laundering and terrorism. The governments of
Australia, Japan and the United States contributed $1 million
each to the Cooperation Fund for Regional Trade and Financial
Security Initiative (CFRTFSI). ADB said the fund will run for
three years. "The fund will allow ADB to play a more active role
in building regional capacity for anti-money laundering and
controlling the financing of terrorism and will help in carrying
out APEC's secure trade agenda," ADB President Tadao Chino said
in a statement.
ADB said CFRTFSI will be given as a grant and is open to all
of the multilateral funding institution's developing
member-countries, especially those that are part of the
Asia-Pacific Economic Cooperation (APEC) such as the Philippines
and those that are considered most at risk. The fund will
support technical assistance to enhance port security (including
airports, cargo ports, and containers) and combat money
laundering and the financing of terrorism in developing
countries.
ADB said the fund's scope will include the establishment of
financial intelligence units and legal and supervisory regimes
for anti-money laundering and promote the upgrade of customs
security and modernization. CFRTFSI will also complement
measures under the Secure Trade in the APEC Region Initiative,
which focuses on protecting cargo, ships, international
aviation, and people in transit.
"Priority will be given to high impact projects that can
catalyze other investment and policy reforms and have a good
chance of local or regional replication," said Rita Nangia,
director of ADB's Finance and Infrastructure Division, which
will manage the fund. The fund was proposed by the US late last
year to help assure sustainable economic growth in the Region by
enhancing and strengthening of trade and financial security. At
the last APEC meeting, held in Bangkok, APEC leaders reportedly
supported this proposal.
CFRTFSI is expected to help boost efforts of developing
countries such as the Philippines to fight money laundering and
terrorism. The Philippines remains in the blacklist of
Paris-based Financial Action Task Force for not strictly
implementing anti-money laundering rules and regulations.
|
The government will face a fiscal crisis unless it collects
more taxes and meets its budget deficit target, Bangko Sentral
ng Pilipinas (Central Bank of the Philippines, or BSP) Governor
Rafael B. Buenaventura warned yesterday. "What we need to do is
to address the problem. If we do not address it, there will be a
crisis," Mr. Buenaventura told reporters. The government
projects a budget deficit of
PhP197 billion this year, from
PhP199 billion last year.
Mr. Buenaventura also said the government aim of balancing
the budget by 2009 would require
PhP50 billion to
PhP100 billion in additional taxes every year in the next
five years. The BSP chief also warned against suspending the
release of local government's share in national taxes, as
required by law. He said foreign creditors could get the false
impression that the government was about to default on its bond
sold abroad. "We are clearly not in that situation," he said, as
he noted most of the country's foreign borrowings were
long-term, with average maturity of 19 years. The Philippines,
Asia's largest foreign borrower, has a total outstanding
external debt of $56.7 billion. Mr. Buenaventura said the
government needed to focus on raising revenues and implementing
tax laws. -- Iris Cecilia C.
Gonzales |
Agreements on 'sensitive
areas' still to be reached
CEBU (central Visayas) -- Delegates from the Philippines and
Japan met in Cebu yesterday for three days of talks aimed at
firming up a free trade agreement between the two trading
partners. At least 96 Japanese officials and 70 Filipinos
gathered here for the negotiations, the latest in a series that
began after Japanese Prime Minister Junichiro Koizumi and
President Gloria Macapagal Arroyo agreed in 2002 to look into
the possibility of such an accord.
Details of the talks in Cebu were not disclosed but a
document said the Japan-Philippines Economic Partnership
Agreement draft, being worked on at the meeting, already covered
trade in goods and services, rules of origin, customs
procedures, paperless trading, mutual standards and investments.
It also covered movement of persons, intellectual property
rights, government procurement, competition, financial services,
communication technology, energy, science and technology, human
resources, small and medium enterprises, broadcasting, tourism,
dispute avoidance and settlement. However both sides also
identified "sensitive areas to both countries", which may need
further talks on investment rules, services, mutual recognition
arrangements, government procurement, rules of origin,
competition, intellectual property and agriculture, the document
said.
This is the third such meeting of the two countries' working
groups, the document said, adding two more meetings were likely
to be needed before the draft was completed by end-2004.
Earlier, Japanese Foreign Ministry press secretary Hatsuhisa
Takashima said the talks were being hampered by the Philippines'
efforts to get Japan to accept more of its caregivers and
construction workers. Associations of Japanese nurses and
construction workers opposed this, he said.
However he said he was hopeful that the Philippines would
complete its free trade talks with Japan ahead of Thailand and
Malaysia, which were also seeking similar accords. "Japan is
very much looking forward to concluding the (agreement) with the
Philippines as the time has come to show the world that economic
relations between and among the East Asian countries is becoming
closer and stronger," Takashima said last week during a visit to
the Philippines -- AFP |
Monetary authorities are likely to keep overnight rates
unchanged for the rest of the year even if the United States
implements another rate increase. Bangko Sentral ng Pilipinas (BSP,
or the central bank) Governor Rafael B. Buenaventura yesterday
said the policy-making Monetary Board (MB) has already factored
in another rate hike of less than 2% by the US Federal Reserve.
"Obviously if the Fed increases by 2%, we may have to assess
again," Mr. Buenaventura told reporters yesterday at ceremonies
marking the central bank's 11th anniversary. In its July 1
meeting, the MB kept policy interest rates unchanged for the
twelfth straight month, at 6.75% for overnight borrowing and 9%
for overnight lending, despite a US Fed rate hike.
The Fed raised interest rates by 25 basis points to 1.25%,
the first increase in four years, to head off inflation in the
growing US economy. The Fed is expected to implement a gradual
increase in interest rates within the year.
The BSP usually matches any rate increase by the US Fed to
keep the peso stable and at the same time encourage investors to
keep their money in the Philippines instead of the US or other
markets where interest rates are higher. Mr. Buenaventura said
the market, particularly T-bill rates which are used as a
benchmark by banks for their lending rates, has already
adjusted.
He also said the BSP -- which is mandated to keep a stable
inflationary environment -- is still optimistic that inflation
will remain within its target of 4%-5% by yearend. "It may not
be necessary to increase rates," Mr. Buenaventura said but
conceded that inflation next year could be much higher than the
target range of 4%-5%.
The National Statistics Office is scheduled to release
inflation figures for June today. The BSP forecasts inflation in
June to stay within 4.2%-4.8% but officials said it could be
much higher because of higher transport costs. Mr. Buenaventura
said inflation for the month could be "much
higher-than-expected," a view shared by BSP Deputy Governor
Amando M. Tetangco, Jr. Nevertheless, Mr. Buenaventura said
monetary authorities agree that the inflation environment in the
coming months ahead does not warrant a monetary tightening.
Inflationary pressures are largely supply-driven and are
therefore not influenced by monetary action, Mr. Buenaventura
said. -- Iris Cecilia C. Gonzales
|
Second quarter economic growth is expected to be upbeat given
leading economic index (LEI) figures. Data from the National
Statistical Coordination Board (NSCB) showed the country's LEI,
which measures business cycle trends, rising for the quarter to
a positive 0.347 from a positive 0.244 in the first quarter.
The LEI is a measure developed jointly by the NSCB and the
National Economic and Development Authority to provide advanced
information on the direction of the country's economic
performance in the short term, in this case, at least three
months before actual economic figures for a particular quarter
are reported. The LEI is computed using 11 leading indicators
that consistently move before the actual expansion or
contraction in overall economic activity. Seasonal factors are
removed from these data, which are assigned weights, indexed and
summed up.
During the review period, seven of the 11 leading indicators
contributed positively to the index: money supply, imports,
consumer price index, exchange rate, tourist arrivals, stock
price index and terms of trade. Movements in money supply,
imports and tourist arrivals have a two-quarter lead over gross
domestic product (GDP), or the total value of goods and services
produced within the economy.
Preliminary data from the Bangko Sentral ng Pilipinas (or the
central bank) showed that domestic liquidity or money supply
reached
PhP1.725 trillion as of December last year, up from
PhP1.67 trillion the previous year. Domestic liquidity is the
total amount of cash and "near cash" items circulating in the
local financial system. Meanwhile, imports jumped 8.4% to $9.496
billion in last year's fourth quarter against $8.757 billion
during the comparable period a year ago, driven mainly by higher
shipments of capital goods.
Statistics from the Department of Tourism also showed visitor
arrivals rose 18.4% to 576,810 in the fourth quarter from
487,002 during the same period a year earlier. The CPI,
meanwhile, has a three-quarter lead over GDP. The positive
contribution of the CPI, which consists of a basket of goods and
services, may be traced to the moderate increases in prices of
goods in last year's third quarter.
Leading indicators in the LEI that tempered its upward
movement were: electric energy consumption, wholesale price
index, number of new business incorporations and hotel occupancy
rate.
Leading economic
indicators (LEI) & GDP growth |
|
LEI (in points) |
Slope |
GDP (growth rate) |
2000 |
Q1 |
(0.030) |
0.128 |
4.0 |
|
Q2 |
0.080 |
0.110 |
4.9 |
|
Q3 |
0.092 |
0.012 |
5.1 |
|
Q4 |
0.045 |
(0.048) |
3.6 |
2001 |
Q1 |
(0.032) |
(0.077) |
3.6 |
|
Q2 |
(0.136) |
(0.104) |
4.2 |
|
Q3 |
(0.226) |
(0.090) |
4.5 |
|
Q4 |
(0.293) |
(0.067) |
5.6 |
2002 |
Q1 |
(0.427) |
(0.134) |
3.8 |
|
Q2 |
(0.545) |
(0.118) |
4.1 |
|
Q3 |
(0.454) |
0.091 |
3.8 |
|
Q4 |
(0.204) |
0.250 |
5.8 |
2003 |
Q1 |
(0.048) |
0.156 |
4.5 |
|
Q2 |
0.061 |
0.108 |
3.2 |
|
Q3 |
0.152 |
0.092 |
4.4 |
|
Q4 |
0.180 |
0.028 |
4.5 |
2004 |
Q1 |
0.244 |
0.064 |
- |
|
Q2 |
0.347 |
0.103 |
- |
Source: NCSB |
|
The government once again refused to take higher premium risk
rates for its 182-day and 365-day debt papers, saying that banks
were not really keen on these instruments but were priming for
the retail Treasury bonds that will be auctioned today. "[If we
look at the auction], there were no bids. Banks are paving the
way for the retail T-bonds," National Treasurer Mina C. Figueroa
said.
Traders polled by BusinessWorld agreed with her but
they also said that the market was still cautious over political
and fiscal uncertainties. "We have yet to look for fresh leads
[that will stabilize us]," one trader said.
The benchmark 91-day T-bill fetched a premium risk rate of
7.714%, up by eight basis points when it was auctioned two weeks
ago.
Tenders were oversubscribed at
PhP5.536 billion against a public offering of PhP4.5 billion. The
auction committee rewarded only PhP3.22 billion worth of bids.
The 182-day and 365-day debt papers will remain at 8.631% and
9.416%, respectively.
Had the Treasury accepted the bids, interest rates for the
182-day T-bills would have jumped by 43 basis points to 9.061%
and the 365-day T-bills by 60.7 basis points to 10.023%. Tenders
were undersubscribed at PhP4.225 billion against a
PhP6.5-billion combined offering, indicating a lukewarm response
from dealers.
RETAIL T-BONDS
Meanwhile, the Treasury said that it will try to cap the
minimum public offering of PhP10 billion for the three-year and
five-year retail T-bonds to pay the maturing PhP30 billion worth
of small-denominated Treasury bills on July 15. "Their appetite
is moving towards these [retail T-bonds]. When was the last time
we saw them ask for 12% premium risk rates for the three- and
five-year bonds?," asked Ms. Figueroa. At the secondary market,
the three-year debt paper fetched 11.4367% while the five-year
instrument 12.16%.
Ms. Figueroa said, however, that the bureau will require
dealers for the retail T-bonds to sell 40% of their subscription
to retail investors "to discipline them." In its notice of
offering last Wednesday, The government said that if banks fail
to do so, they will not pay for the commissions for the balance
of the total sales. "This is not new [40% minimum sale]; before
they subscribe, they have to be accredited first," another
trader said. -- Ira P. Pedrasa
|
The Supreme Court, in an en banc session last Tuesday, has
asked the Manila Electric Co. (Meralco) and the Energy
Regulatory Commission (ERC) to comment on the plea of a consumer
group to void a rate hike. The National Association of
Electricity Consumers for Reforms asked the high court on June
28 to void the June 2 ERC decision which increased the
generation rate to PhP3.3213 per kilowatt-hour (kWh) from
PhP3.1886 per kWh. The group also asked for a temporary
restraining order to prevent Meralco from instituting the
adjustment.
In an eight-page petition, the consumer group said "Meralco
is threatening or attempting to implement an increase in the
generation charge to be paid by consumer-members of the
petitioners and the public respondent is suffering this to be
done in violation of the rights to due process of petitioners."
The consumer group alleged the decision to hike rate was arrived
at without a public hearing or consultation.
Also, the group said consumer groups such as themselves were
not given the opportunity to contest Meralco's application as
they were not informed even though they were active participants
in ERC proceedings. Add to this, the consumer group said the
power company did not adhere to the procedure that required them
to publish the said application in a newspaper of general
publication. "The lone issue, here, is whether or not the ERC
order, dated 2 June 2004 is null and void, for lack of the
requisite publication, thereby depriving petitioners of
procedural due process," the consumer group said.
According to the rules, the application of the power company
must be published in a newspaper of general circulation and the
ERC must study the comments of customers and the local
government unit concerned. The two requirements, the consumer
group said, "are aimed at protecting the consumers and
diminishing the disparity or imbalance between the utility and
consumers."
Last month, the Supreme Court declared as illegal the
12-centavo per kWh increase Meralco charged its consumers from
Jan. 1 to 13 after the high court found the utility company
failed to comply with the publication requirement.
-- Ma. Elisa P. Osorio
|
Special Report
By LUZ RIMBAN
Philippine Center for Investigative Journalism
Conclusion
BGY. TINANG, CONCEPCION, Tarlac -- Farmer Loreto Rivera has
been tilling the soil here for the past 30 years, and it shows
on every inch of his thin, bent, and sunburnt body. Now
63-years-old, he knows almost every family in this barangay of
2,000 people. But he cannot name a single farmer or farm worker
who was given land from the 212-hectare de Leon estate here, one
of the biggest haciendas in Tarlac. Officials of the Department
of Agrarian Reform (DAR), however, say the land had already been
placed under the Comprehensive Agrarian Reform Program (CARP). "Na-CARP
daw pero ni isang tao walang nabigyan. [The land was placed
under CARP but not a single person has benefitted]," Mr. Rivera
wonders aloud.
The DAR officials, however, were right: the land had been
sold to 77 "farmer-beneficiaries." But these beneficiaries were
not farmers. They were the children and grandchildren of the
wealthy de Leon landowners. As a result, the hacienda remains in
the de Leon clan, the documents attesting to its members' being
"farmer-beneficiaries" drawn up, received, and endorsed by the
very bureaucracy in charge of implementing the land reform
program. The Tinang estate is an example of the many problems
that impede the implementation of a genuine land distribution
program in the country. Landlords evading CARP are just one of
them.
Another is the agrarian reform bureaucracy that seems to be
more concerned with "fast-tracking" land distribution than in
checking who actually gets the land. In many places, DAR
bureaucrats are also beholden to landowners. Meanwhile, the
landless peasants for whom the program was intended in the first
place get a raw deal. Most of them are unschooled and unaware of
their rights under CARP. "Nahihirapan ang mga magsasaka na
tumuklas kung ano ang karapatan namin [Farmers like myself
are hard-pressed figuring out what our rights are]," says Mr.
Rivera, who used to head the local farmers' cooperative here. "Wala
kaming alam sa CARP, wala kaming nalalaman sa batas [We know
nothing about CARP, we know nothing about the law]." Most
farmers here did not reach high school and are clueless about
the CARP provisions and processes. No one, in fact, had bothered
to inquire about the de Leon estate. The farmers learned about
it only by accident -- a local resident went to the Tarlac
Register of Deeds asking for a cadastral survey of the land, but
was instead given the Transfer Certificate of Title that showed
77 farmer-beneficiaries with surnames like Escaler, Jalandoni,
Rufino, and Lopa.
The land, as far as residents know, is managed by Luis
Jalandoni, a grandson of Jose Joven de Leon who owns vast tracts
of land in Central Luzon. Jalandoni is also the president of
Daniel Agricultural Corporation (DAC), which local people know
as the employer of farmworkers here in Tinang, and in another
sugar estate in Barrio Plastado, Gerona, Tarlac. Mr. Jalandoni,
local residents say, was once married to Georgia Osmeņa of the
influential Cebu clan. Their children's names also appear as
"farmer-beneficiaries" of the de Leon sugar land here. Several
attempts to reach Mr. Jalandoni at his office in the de
Leon-owned Regina Building on Escolta, Manila failed. A written
request for an interview went unanswered; when the PCIJ called
up his office, it was told he was "on vacation."
'A REAL JOKE'
"There is so much corruption in land reform...it's a real
joke," says Michael Escaler, a sugar miller and trader whose
name, ironically, appears as one of the 77 farmer-beneficiaries
to the de Leon estate. Mr. Escaler says he is talking from his
own experience as landowner dealing with the DAR. "Somebody in
the DAR is making a lot of money and I don't know that anybody
else is really benefiting now." Mr. Escaler, a cousin of Mr.
Jalandoni and son of one of the landowners, shares farmers'
criticisms of land reform, but from the point of view of
landowners and businessmen. "I think land reform made us a poor
country rather than a rich country," he says.
Like other landowners, he favors big corporations retaining
control over the land or buying it back from farmers who do not
have the means to make the land productive. To Mr. Escaler,
questionable practices on how the land is distributed, such as
the irregularities in Tinang, are just minor problems. "The big
problem," he says, "is how to feed the people cheap; that is, we
have to be efficient. We have to provide jobs so we keep our
agriculture alive. Land reform isn't doing that."
Indeed, being a farm worker or tenant in Tinang, employed by
the de Leon descendants, doesn't bring much relief either. A
farm worker employed by the Daniel Agricultural Corporation is
paid only
PhP140 daily, which is way below what a family of four or
five needs to subsist on. Schooling costs can barely be squeezed
into family budgets; an illness could force a family into debt.
In fact, most people here, says barangay councilwoman Edita
Mariano, are locked in an unending cycle of debt. Even those
like farmer Rivera who were given rice land under the old land
reform program of Ferdinand Marcos are forced to use their land
as collateral to enable them to borrow. Many eventually end up
losing their land to usurers. "Karamihan sa mga magsasaka
below poverty line [Many farmers live below the poverty line],"
laments Mr. Rivera, who plants sugar on his land that is less
than a hectare in size.
ENDLESS DEBTS
Even farmers who have been given land under CARP often
realize that they do not necessarily run out of worries.
Although CARP makes available seeds and fertilizers to farmers,
there is no income with which to feed their families until the
next harvest season. In between harvests, the farmers again fall
into debt.
Remarks Mr. Rivera: "Ang CARP, sasabihing programa ng
gobyerno. Pero kailanman hindi nila hahayaan umangat ang
maliliit. Kung umangat ng konti, pababagsakin [CARP may be a
government program but they will never let the poor progress. If
the poor are able to rise even just a little, they are swiftly
dragged down.]" Farmers have also become wary of DAR.
Around 1995, say Rivera and Mariano, a team of DAR employees
came to Tinang asking local farmers and farm workers to sign up
as potential CARP beneficiaries to the de Leon sugar estate. But
nothing became of that, although 10 years later, they would be
told the land had already been given away.
In 1995, the de Leons submitted their estate to the CARP
program. As then Provincial Agrarian Reform Officer for Tarlac,
Teofilo Inocencio recalls, the department was concentrated on
rushing program implementation, targeting as many as 8,000 to
10,000 hectares of Tarlac land each year for coverage, the
better to beef up annual achievements.
DEMOCRATIC ... AND SHOT FULL OF HOLES
Unfortunately, "mukhang nasingitan kami (one case got
away)," admits Mr. Inocencio, who as PARO gave final approval to
the de Leon land transfer. Mr. Inocencio argues that his job as
PARO was ministerial -- he did not look into the details of
voluminous Voluntary Land Transfer (VLT) cases and only signed a
worksheet or summary attached to the file. "It's a revolutionary
program," he says. "We're doing it in a democratic way. It's
moving, pero alam mo naman may mga butas din ang batas eh
[you know our laws are flawed]."
One of the law's loopholes was apparently the VLT scheme --
or more precisely, the people who were supposed to monitor it. A
VLT is intended to be an amicable arrangement whereby landowners
can sell their land directly to landless farmers without the
need for government funding and intervention. At that time, the
VLT entailed minimal involvement from DAR, and was settled only
among the landowners and farmers, the barangay captain who acts
as agrarian reform representative, and the municipal agrarian
reform officer. Final approval of any VLT rested with the PARO.
DAR has since revised this policy, giving final approval to the
regional director as a means of instituting a check-and-balance
mechanism, says Mr. Inocencio. Crucial to this system is the
barangay captain, whose job as representative of the Barangay
Agrarian Reform Council (BARC) is to ensure that it is
legitimate farmer-beneficiaries who get the land; he is supposed
to screen them and verify that they meet the criteria for
beneficiaries.
In the de Leon case, barangay captain Vernon Villanueva
happened to be the son of Jose 'Pepe' Villanueva, the overseer
of the de Leon estate until last year. Vernon, who also chairs
the Association of Barangay Captains (ABC) in Concepcion town,
has since taken over his father's job as katiwala of the
de Leon land. Vernon's brother Jojo heads the farmers'
cooperative in the neighboring hacienda once owned by the
Dominican Province of the Philippines and recently placed under
CARP. In the last election, another Villanueva brother, Noel,
ran for mayor of Concepcion and won. Vernon Villanueva's
signature appears as the BARC representative certifying to the
authenticity of farmer-beneficiaries. Also appearing on the
documents is the endorsement of Virgilio Antonio, then the
municipal agrarian reform officer.
Documents on file at the Tarlac Register of Deeds show that
the de Leon estate's 77 farmer-beneficiaries had been given
certificates of full payment and their Certificates of Land
Ownership Award or CLOAs as far back as 1996, or less than a
year after their VLT applications were approved. Current DAR
insiders say this alone should have puzzled the CARP
implementors in Tarlac in 1995. Genuine farmer-beneficiaries
usually take years to pay, if they manage to do so at all.
The Transfer Certificate of Title (TCT), as well as documents
submitted by the barangay captain to the municipal and
provincial agrarian reform offices, reveal that the 77
farmer-beneficiaries "bought" the land at the price of
PhP150,000 per hectare. The de Leon VLT folders at the
Municipal DAR office in Concepcion show that each of the 77 De
Leon "farmer-beneficiaries" individually filled out beneficiary
information sheets, certificates of full payment, and deeds of
voluntary transfer. They identified themselves either as farmers
or farmer-businessmen, residents of Tinang, owning no other
landholding anywhere else in the country. Mr. Inocencio, who is
now assistant regional director for operations for Central
Luzon, said DAR Region 3 is considering forming a task force to
look into what can be done to correct the situation at the de
Leon estate.
LITTLE HOPE
But DAR might not be able to undo what it did there. One
option, says Mr. Inocencio, is to disqualify the
"farmer-beneficiaries" and revoke CARP in the de Leon estate.
But previous experience brings little hope. Mr. Inocencio
himself talks of a CARP case in Nueva Ecija that the DAR sought
to cancel before the courts. The case was dismissed and the
cancellation turned down. "Kasi nga raw," Mr. Inocencio
explains, "DAR ang nagbigay, siya pa nagpapa-cancel [DAR
was the one who gave it, and now it was the one having it
cancelled]."
In the meantime, Loreto Rivera continues to till the soil.
His children, now all grown, do not seem interested to follow
his footsteps. One is a tricycle driver, another does odd jobs
here and there, while a third has somehow managed to go to
college and is studying economics. Someday, with or without
government help, the family's fortunes may change for the
better, although Loreto Rivera is already resigned to his fate.
"Kaming mga mahihirap, pasensiya na lang, tutal kami kaya
naming magtiis [All the poor like us can do is to bear this
injustice. Anyway, we can take it]," he says. "Ang mayayaman
hindi [The rich can't]."
Part 1:
In Tarlac,
CARP gives land to the wealthy |
American Express Savings Bank, the local retail bank of New
York-based financial giant American Express, is putting up a
backroom office in the country that will service its parent
firm's affiliate banks worldwide. This was learned over the weekend from a Bangko Sentral ng
Pilipinas (Central Bank of the Philippines, or BSP) official who
said the policy-making Monetary Board last Thursday approved
Amex Bank's plan. "The board approved in principle the request of Amex
Philippines to provide back office services to American
Express-affiliate banks," BSP Deputy Governor Alberto V. Reyes
told reporters.
The Philippine backroom office will be Amex's second
international operation center -- next to India -- that will
handle its worldwide back office needs. "It will provide
employment to the locals," Mr. Reyes added. Amex Bank is one of the newest local banks, having bought
into the former Omni Thrift Bank in 2001. The Monetary Board approval will allow the local Amex office
to provide international backroom services, specifically credit
card reconciliation, data control administration, letter of
credit processing, and foreign exchange and money market
settlements.
Mr. Reyes said investment figures were not available because
Amex Bank has yet to get final approval for the project. A
project site has not been identified either. Amex Bank is the latest financial institution to gain the
central bank's nod for establishing extended backroom
operations. British financial giant HSBC Group last April said it would
also open a call center in the country within the year to
support the processing and customer service needs of its banks
worldwide.
The Philippines currently ranks second to India as a site for
call centers and business process outsourcing. The government
aims to make the country the world capital for such businesses
by 2009. -- Iris Cecilia C.
Gonzales |
Privately-owned and IT zones notch high growths
By FELIPE F. SALVOSA II, Reporter
Higher export receipts of privately owned economic and
information technology (IT) zones led to a 36% increase in total
exports from January to May of firms registered with the
Philippine Economic Zone Authority (PEZA). Data released over the weekend showed PEZA exports amounted
to $12.626 billion for the first five months of the year, up
from $9.309 billion in the same period in 2003. Exports from 35 special ecozones reached $9.792 billion, a
46% growth from last year's $6.689 billion. Fourteen IT
buildings and parks registered export revenues of $72.480
million, up 60% from last year's $45.162 million. All four public ecozones posted positive growth, with exports
of $2.762 billion from $2.574 billion in January to May 2003 for
a 7% increase.
Again topping the list of exporters was the Laguna Technopark
in Sta. Rosa, Laguna -- site of firms such as Fujitsu Ten
Corporation of the Philippines, Fujitsu Die-Tech Corporation of
the Philippines, Hitachi Computer Products Corp., and Honda Cars
Philippines -- with $3.550 billion in exports for a 22% growth. Second-ranked Gateway Business Park in General Trias, Cavite,
host to Intel Tech Philippines, Inc., registered $1.825 billion
in exports, a 300% increase over last year.
Rounding up the top ten were Amkor Technology ($850.762
million), Carmelray Industrial Park I ($404.467 million), Lima
Technology Center ($333.329 million), Carmelray Industrial Park
II ($281.085 million), Light Industry and Science Park II
($278.214 million), People's Technology Complex ($272.254
million), Light Industry and Science Park I ($259.100 million),
and Leyte Industrial Development Estate ($259.040 million). RCBC Plaza has dislodged Eastwood City Cyber Park as the
biggest earning IT building with $20.353 million in export
revenues, an increase of 231% from last year's $6.144 million.
Eastwood registered $18.506 million in export revenues, down
17% from last year's $22.416 million. It was followed by Pacific
IT ($10.672 million), The Enterprise Center ($5.796 million),
and PBCom Tower ($5.477 million). Among the government-operated ecozones, Baguio City Economic
Zone ranked first with $1.196 billion in exports, up 6% from
$1.129 billion in January to May 2003. Exports from Cavite Economic Zone totaled $809.785 million, a
7% increase, followed by Mactan Economic Zone ($625.115 million,
up 12%), and Bataan Economic Zone ($131.236 million, up 18%).
|
The Energy Regulatory Commission (ERC) wants the Supreme
Court to reconsider a June 15 order declaring a rate increase
granted to Manila Electric Co. (Meralco) as illegal. In a 22-page motion filed on Friday, the ERC claimed it did
not commit grave abuse of discretion when it allowed a PhP0.12
per kilowatt-hour (kWh) increase for Meralco in November 2003.
The Supreme Court has ruled the increase illegal as "records
show that Meralco failed to comply with the publication
requirement prescribed by the IRR [implementing rules and
regulations of the Electric Power Industry Reform Act of 2001]." Apart from the publication requirement, the Supreme Court
said the ERC also failed to consider the pleadings and comments
of consumers and the local government unit (LGU) concerned,
agreeing with the Freedom from Debt Coalition, the main
petitioner, that Meralco's application for a rate increase was
void. However, the ERC claimed Meralco sufficiently complied with
the publication requirement when the company published a notice
of application in the October 10, 2003 issue of The Manila
Times. "The intent of the framers of the law was only to require the
publication of a notice of application and not the application
itself," the ERC said.
The ERC further said it would be preposterous to expect
Meralco to publish the entire application and not just the
notice. Considering the technical nature of rate cases, the
applications usually consist of hundreds of pages, it said. "It may not be amiss to point out that the said publication
costs will ultimately be passed on to the consumers as
legitimate operating expenses," the ERC said. The ERC said that it agreed with the dissenting opinion of
Justice Reynato Puno when he pointed out that "it would be
absurd to require Meralco to publish the entirety of its
application ... courts have the duty to interpret the law in
such a way to avoid absurd results."
The ERC also cited the case of 118 electric cooperatives,
which only published their notices of application for rate
reductions. The said applications resulted in the ERC ordering
an average reduction of PhP0.2029 per kWh. If the Supreme Court's ruling on the Meralco case is to be
followed, then the petitions of the electric cooperatives should
also be rendered void, the ERC claimed. The High Court also faulted the ERC for not resolving pending
motions for document production before coming out with its
ruling. However, the ERC said the IRR does not require the Commission
to resolve motions. It said it is enough to give due
consideration to the comments or pleadings of consumer groups or
the LGU concerned before issuing a provisional authority. "To hold otherwise would mean that ERC can be held captive by
oppositors just by continuously filing dilatory pleadings which
may not in anyway guide the ERC in determining the propriety of
granting or denying a provisional authority," it said.
Furthermore, the ERC said the comments and oppositions
offered no plausible arguments that the Commission could
consider before issuing an order. "There was nothing in the said comments and oppositions that
could have warranted the denial of the motion for the issuance
of the provisional authority," the ERC said.
|
If the government does nothing to reduce the current
population growth rate, President Gloria Macapagal-Arroyo's
target of achieving an average $2,000 per capita income by 2010
will not be achieved, a legislator said. "I think the policy implication of this per capita income
goal is to grow the economy by 10% per annum" Albay Rep. Jose
Ma. Clemente S. Salceda said. "But the economy is growing
naturally by only roughly 7% per annum, assuming that we don't
have these fiscal problems." "Therefore, to achieve the $2,000 per capita income goal, the
2.36% population growth rate must be reduced," he said. "It will
be statistically impossible for Ms. Arroyo to achieve her goal
by 2010 if the population growth rate remains at 2.36%."
With the population growth clearly impinging on economic
growth, Mrs. Arroyo markedly neglected to mention her
government's plans on how to manage the issue during her
inaugural speech last week. Housing secretary Michael T. Defensor said population is "not
a major thrust" since the government has already spelled out its
population policy. The president's 10-point program, he said, is basically aimed
at enabling the poor to participate in any development. "The thrust is to deliver basic services to the poor - water,
electricity, education - which are not beyond what are needed,"
he said.
|
By JENNEE GRACE U. RUBRICO, Senior Reporter
The Securities and Exchange Commission (SEC) has come up with
the rules and procedures to check on the compliance of covered
institutions with the anti-money laundering law. The procedures, a copy of which was released to reporters
last Friday, aim to evaluate the institutions' risk management
structures on anti-money laundering as well as evaluate the
adequacy of their policy, procedures, systems and controls
against money laundering. SEC said the examination will recommend remedial actions to
be undertaken by covered institutions when their policies,
procedures, systems, and controls are not sufficient or when
they have not complied with the law.
SEC is one of three institutions comprising the Anti-Money
Laundering Council, the institution created to implement the
law. The other members of the council are the Bangko Sentral ng
Pilipinas (central bank) and the Insurance Commission. Under the rules and procedures on anti-money laundering,
examiners will give covered institutions an SEC anti-money
laundering compliance form to fill up. A core group composed of
representatives from different SEC departments will set a random
validation process that may be applied to covered institutions
or on a per-industry basis. "The special core group shall also set the criteria for the
selection of covered institutions to be covered by the random
validation, which criteria may include total value of all
assets, level of activities, gross revenue, answers indicated in
the SEC-AML form previously identified level of money-laundering
risks, and other such factors," the rules state.
Examiners may adopt different approaches in the examination
of the covered institutions. These include physical examination
of documents, confirmation, comparison, tracing, inspection,
reconciliation, and inquiry. During the examination of the covered institutions, examiners
will assess the institutions' anti-money laundering operating
manual or internal controls, policies and procedures, to check
if these are sufficient and are being implemented. Examiners will also determine if the companies have a system
of conducting anti-money laundering risk assessment on its
products or services, and if these are adequate to manage money
laundering risks. They are also required to check if the covered
institutions have conducted customer due diligence. "Examiners may conduct random sampling of the customers'
account opening forms or conduct interviews with the frontline
staff or employees authorized to accept customers and other
personnel that may be deemed necessary," SEC said. It added that examiners will also assess procedures adopted
for verification of sources of funds.
Also part of the examination, SEC said, is an evaluation of
whether the covered institutions have taken actions to clean out
old accounts. Examiners will also look into whether the they
have allowed their customers to open or maintain anonymous,
fictitious, or incorrect accounts or have allowed the opening of
accounts without face-to-face contact. For agents and authorized signatories, examiners will
evaluate if the institutions establish the identities of these
representatives, SEC said. "In case [the covered institution]
suspects that the trustee, nominee, or agent is only a dummy,
determine whether further verification is undertaken... to
verify the business relationship, and evaluate the adequacy of
the system of verification," SEC said.
It also said if "satisfactory evidence of beneficial owners"
is not obtained, examiners will check if the institution
continues to transact with the client or has stopped
transactions with the account. For securities brokers and dealers, SEC said examiners will
determine whether the account information form of their clients
provides information about them. It also said examiners will
determine the procedures adopted by brokers or dealers to verify
or analyze their customers' investment objective against
investment needs and financial capacity.
For the pre-need industry, examiners are also required to
check if the companies check on the identities of their clients.
The examination rules also require examiners to check the
monitoring, recording and reporting systems of covered
institutions. Compliance officers and personnel of covered institutions
will also be examined to assess the extent of their knowledge
and skills on the anti-money laundering law. "After evaluation of [covered institutions'] AML risk
management structure, examiners, or the teams of examiners are
required to prepare their written findings on the adequacy and
effectiveness of the implementation... of the AML operating
manual, its internal AML controls, policies and procedures or
compliance with the provisions of the [Anti-money Laundering
Act]," SEC said.
Under the law, financial institutions covered by the
legislation, such as banks and financial intermediaries, will be
asked to report transactions involving an amount exceeding
PhP500,000 within a single banking day. The law also states that covered institutions should report
suspicious transactions that will cover any amount provided that
there seems to be no underlying trade obligation for the
transaction. The Philippines is currently working on its application to be
stricken off a list of countries perceived to be uncooperative
in the fight against dirty money. The government is hoping to be
removed from the list by October 2004. |
Even if bids were to be rejected one after the other, debt
traders said they are determined to seek higher rates given the
government's aggressive borrowing program aimed at plugging its
budget shortfall. At today's auction, the premium risk rate for the benchmark
91-day Treasury bill is expected to be between 7.75% and 7.875%,
higher by 11.6 to 24.1 basis points. Bids for the 182-day and 365-day debt papers are seen to be
rejected again by the Bureau of the Treasury.
Two weeks ago, the auction committee junked all bids for
these papers, claiming the market's asking price was
unreasonable considering uncertainties have been reduced upon
President Gloria Macapagal Arroyo's proclamation. "[National Treasurer Mina C. Figueroa] zeroed in on the
proclamation as a stabilizing factor, but the market is also
looking at the country's fiscal status," one trader said. Roberto Juanchito T. Dispo, First Metro Investment Corp.
senior vice-president said, "We've been reading in the papers
that the national government is pushing up a very aggressive
borrowing program for the year and even next year to source its
funding requirements." The trader said the market will not discount the possibility
that the central bank will adjust inflationary measures
correspondingly to that of the United States. Last June 30, the
US Federal Reserve increased key interest rates by 25 basis
points. "This will trigger dollarization and exodus of possible
investments toward US shores because yields will be far better
there compared to yields they will get domestically," said Mr.
Dispo, a former deputy treasurer at the Treasury bureau.
Another trader said if the country does not shape up on its
fiscal resolutions, "there may be downgrading again from several
international rating agencies." Recently, Fitch Ratings warned the country of a possible
credit rating downgrade if the new administration fails to
answer its fiscal problems. Such downgrade could hamper the
government's borrowing plans, traders said.
RETAIL T-BONDS
Meanwhile, the bureau will auction tomorrow retail Treasury
bonds worth
PhP10 billion that will mature in three and five years time. Ms. Figueroa said this program is in answer to the market's
lukewarm response to the government's regular debt papers in
past auctions. "Keeping in mind [the retail T-bonds'] success story in the
past, we expect oversubscription that may reach PhP25 billion to
PhP30 billion, but premium risk rates may reach 11% to 11.25%
for the [three-year retail T-bonds] and 12% for the [five-year
retail T-bonds)," said another trader.
PESO
In the currency market, traders still expect a range-bound
peso as factors such as political uncertainties and the Fed
interest rate hike have already been assumed in the past few
weeks. Last Thursday, the Philippine peso strengthened against the
US dollar past PhP56, a level it was stuck in for almost two
weeks. General sentiment from traders that the peso will go
strong pushed the local unit further by Friday, gaining eight
centavos on average, but remaining unchanged at closing. This
week, traders expect it to move between PhP55.95 and PhP56.10,
and try to break PhP55.80 to finally move back to more stable
ground. -- Ira P. Pedrasa
|
By ROULEE JANE F. CALAYAG
The stock market will likely experience an upswing this week
as investors scout for enticing leads to spur trading. Corporate and economic fundamentals are expected to produce
fresh leads to help the trading barometer reverse its losses
last Friday. Analysts told BusinessWorld that there is an array of
indicators that could spur the market to redeem its initial
gains of 14.20 points at the start of the month. These include
an expected tame inflation report as well as government and
corporate data. Francisco Liboro, president of PCCI Securities, Inc., said he
was confident that the market, poised for a reversal, would
tread on positive ground through the week. "The market is likely to experience a continuation of earlier
gains or a return to upswing because no major event is
expected," Mr. Liboro said. He noted that while there are no significant events that
could trigger a rally this week, he said indicators are showing
positive signs for the market. "There are no significant concerns in the near term," he
said. The Philippine composite index (Phisix), he said, is likely
to test a level between 1,620 and 1,700.
PLDT GROUP
The stocks that are projected to create strong interest this
week include mobile phone firms Pilipino Telephone Corp. (Piltel)
and Smart Communications, Inc. together with their parent firm,
Philippine Long Distance Telephone Co. (PLDT). Mr. Liboro said investors should keep a tight watch on the
numbers for Piltel. "They should look at the share prices of Piltel. If the
prices go way below [its present price], investors may get
scared," said Mr. Liboro. Piltel was up PhP0.08 at PhP1.90 on 38.1 million shares on
Friday, following the approval of its board authorizing an
increase in the mobile phone operator's capital stock. Through the creation of common shares that will accommodate
the conversion of preferred shares in the future, Piltel's
capital stock will be raised by 265.7% to
PhP12.8 billion from PhP3.5 billion.
Meanwhile, a deal allowing Smart to take over about 69.4% of
Piltel's total restructured debts is expected to lead to Smart's
taking control of Piltel. Mr. Liboro said should the prices of PLDT, Smart and Piltel
unduly move up because of this development, the situation must
be alleviated immediately to prevent investors from selling off
their stocks. He also noted that some rejection may be observed
in the market as a minor follow-up to last week's trading
performance.
INFLATION
On the other hand, Ron Rodrigo, analyst at Accord Securities,
Inc., said the market may draw leads from the inflation report
that will be released tomorrow. The inflation rate in the
Philippines has risen steadily this year, hitting 4.5% in May
from 4.1% in the previous month. Mr. Rodrigo said a lower inflation forecast that is
acceptable to the market is 4.2%. The Bangko Sentral ng Pilipinas earlier said the inflation
target of between 4% and 5% will be kept.
Amando Tetangco, the central bank's deputy governor, had said
that despite the threat of higher oil prices and security risks,
the country will meet its growth. Mr. Tetangco also said the central bank saw no need to change
its monetary stance which would be reassessed only when oil
prices spike or security threats return. Accord Securities' Mr. Rodrigo said the inflation forecast
will spur some positive movement for the market. He also expects
corporate earnings reports, which will start coming in later
this month through August, to boost market activity.
CORRECTION
The market's direction through the week, said Mr. Rodrigo,
will depend on second- and third-liners. Given this scenario, a
correction would be a welcome respite for the market. Jose Vistan, Jr., AB Capital research director, in his online
commentary said share prices need to correct in order to entice
investors to come back to the market. "Seasonally, we are going into one of the slowest times of
the year. We are at the start of the third-quarter doldrums,
where we could see a down draft over the next few weeks," said
Mr. Vistan.
He cautioned investors to be decisive in their moves because
of the limited prospects for growth given the high expectations
set for earnings. Heightened earnings expectations may make it hard for
companies to measure or beat estimates, he said. "Since so much have already been priced into share prices,
there will not be enough fuel in terms of beating earnings
estimates to push the market upward," he said.
FACTORS
Stock investors will also try to ascertain the market's
direction based on how President Gloria Macapagal Arroyo and her
team would perform as the administration begins a fresh term. Other concerns include an examination of how the transitional
government in Iraq fares and the stability of oil prices in the
world market. The prices of stocks and the strength of earnings would be
equally critical factors for market players. There is also the
issue of local and external interest rates. Players want to know
the extent that interest rates will go to see if they are
picking the right stocks.
TELCO-LED RALLY
Stock portal 2tradeasia.com said trading sessions might range
between 1,580 to 1,610. It said descents are bound to be
limited, with several erstwhile concerns already factored into
the bourse, noting that another telco-led rally may cushion
possible declines. The overnight rise in PLDT's American Depositary Receipts is
expected to lend support to the telco rally. The stock portal also noted that some short-term players may
cash in temporarily until they get feelers on how latest local
inflation data will turn out this week. "Indications from monetary authorities to maintain benchmark
rates should limit descents," noted 2tradeasia.com. It sees immediate support at 1,580 and resistance between
1,610 and 1,620. |
The Securities and Exchange Commission (SEC) is hoping to get
technical assistance from the World Bank for a survey on
financing companies and their impact on the economy. The study, SEC officials said, would help the corporate
watchdog in drafting a policy on regulating financing companies.
"We wanted funding for the diagnostic survey of the financing
companies and then come up with a regulatory policy to be
recommended to government. This is to really find out what the
business is all about," SEC officials said. Officials noted there are 650,000 financing companies, of
which 10,000 are lending investors. Officials also noted that few lending investors have
converted into lending companies.
Under Memorandum circular No. 13, SEC has required lending
firms to convert as financing companies. SEC officials said the study will also cover how the
financing companies could be tapped for funding by small- and
medium-sized companies. "We have been bothered by the fact that
we are encouraging lending investors to convert into financing
companies and at the same time we also realize the need for
providing capital for small- to medium-scale industry and how
you could link this up," an official said.
SEC officials said they are uncertain how much the budget for
the study would be, but said the government will ask for a grant
that would cover the amount needed to complete the study. They also said the study would be completed in two years'
time. "It's really a grant to cover the costs of experts for coming
here. We told them we would need it, if they approve it,
starting July. That has already been in the works for a few
months," an official said. \Earlier, the World Bank agreed to fund a study that would
look into amendments to the Corporation Code.
-- Jennee Grace U. Rubrico
|
College Assurance Plans Philippines. Inc. (CAP), one of the
country's largest pre-need companies, incurred a
PhP17-billion shortfall in its trust fund level as of
end-December last year, raising concerns over the firm's ability
to serve the future needs of its planholders.
In its 2003 audited financial statement submitted to the
Securities and Exchange Commission (SEC), CAP's external auditor
pointed out that the company has only
PhP8.49 billion in trust funds managed by its trustee banks,
substantially lower than its actuarial reserve liability (ARL)
of
PhP25.6 billion. "Its trust fund assets, which are being managed by trustee
banks, had not grown sufficiently to match the total ARL of
PhP25.6 billion, thus resulting in a trust fund deficiency
of
PhP17.2 billion as of December 31, 2003," said Jerome
Antonio B. Constantino of local audit firm Constantino
Guadalquiver Mendoza and Co. He noted that CAP's trust fund shortfall ballooned in 2003
because the company under-reported its ARL in past years.
A study by SEC's actuarial consultants last year, which was
also reviewed by an independent actuary, showed that CAP's
liabilities should be at
PhP25.657 billion by the end of 2003, as opposed to the
PhP11.928 billion the company stated in its financial
report. The significant increase in CAP's liabilities was due to the
changes in methodology and actuarial assumptions, and the number
of fully paid plans that were not not included in determining
the company's actuarial liabilities in past years.
A trust fund, or money set aside by a pre-need company to
service the future needs of its planholders, is considered
insufficient when it is lower than the projected liability or
the estimated total amount of payment for tuition fees or burial
costs the pre-need company will have to pay in the future. This
amount is referred to as the ARL. The ARL is computed on the basis of assumptions on interest
rates, inflation rates, and percentage of lapsed plans or
contracts cancelled due to incomplete payment and, in the case
of educational plans, tuition increases. CAP also reported a capital deficit of
PhP5.421 billion as of end-2003, and a net loss of
PhP2.758 billion in the same period. These were
substantially higher than the previous year's
PhP2.6-billion capital deficiency and
PhP403.2-million loss.
TOUGHER TIMES AHEAD
This financial performance was attributed to "the economic
condition and the resultant decline in the pre-need industry,
which continue to affect the company's operations." Despite bullish overall economic prospects for this year, CAP
expects tougher times ahead, prompting its external auditor to
raise doubts over the company's viability. "Management projects a negative cash flow from operations in
2004. These factors, among others, raise substantial doubt about
the company's ability to continue as a going concern," the
auditor said.
As of end-2003, CAP's cash and cash equivalents totaled
PhP88.252 million, from
PhP103.58 million in 2002. Mr. Constantino said CAP's survival hinged on its
management's capability to implement a planned eight-year
internal rehabilitation program geared towards generating equity
and liquidity to meet the company's commitments and obligations.
Initiatives include, among others, quasi-reorganization,
capital build-up, sale of assets, and cost reduction programs.
It will also include trust fund assets build up, liability
management, real estate development projects through joint
ventures, loan programs, and special surrender programs for
matured plans. "Management believes that with the implementation of their
program for building up equity and liquidity, the company will
continue to operate in the normal course. The company's ability
to continue as a going concern is dependent on the successful
implementation of this program," Mr. Constantino said. CAP's external auditors, however, declined to give an opinion
or endorse the veracity of the company's financial statements.
"In our opinion, because of the significant effects of the
matters discussed...the parent company financial statements do
not present fairly, in conformity with generally accepted
accounting principles in the Philippines and the SEC's Pre-need
Uuniform Chart of Accounts, the financial position of the
College Assurance Plans Phils. Inc. as of Deccember 31. 2003,
and the results of its operations and its cash flows for the
year ended," he said. Mr. Constantino said CAP appeared to have violated accounting
rules when it understated its liabilities for 2003.
CAP deferred the recognition of its higher ARL level for 2003
since it has asked SEC for a leeway to amortize its trust fund
shortfall over five years. This is in line with guidelines issued by SEC last December
that allows qualified pre-need companies to amortize their trust
fund shortfall, provided the amortized funding is warranted and
provided that the discrepancy is a result of lower interest rate
assumptions. But, as of the preparation of its financial report last
April, CAP's application for a leeway has not been granted by
SEC, putting into doubt the exclusion of its higher liability
level in its financial report.
The regulatory leeway is intended primarily to provide a
reasonable transition for pre-need companies to address the
expectedly high trust variance as a result of the SEC
requirement to use realistic and attainable interest rate
assumptions in the valuation of liabilities. In an effort to improve CAP's financial state, SEC last year
installed a comptroller to oversee the operations of the company
and to implement programs that would help the firm cut costs.
In 2002 SEC found that the company's trust fund level was
short by
PhP2.5 billion, and gave it until last year to look for ways
to look for funds to plug the deficiency. Since CAP is one of the largest pre-need firms in the
country, the discovery of its trust fund defiency depressed
overall pre-need sales during the remaining months of 2002.
-- Leilani M. Gallardo |
Special Report
By LUZ RIMBAN
Philippine Center for Investigative Journalism
First of two parts
BGY. TINANG, CONCEPCION, Tarlac -- When President Gloria
Macapagal-Arroyo last week began her six-year term, her
inaugural address had one glaring omission: it made no mention
of land reform. But it was an omission that was barely noticed. To many, and
especially to the government, land reform is practically a done
deal, a program nearly complete, and about which little more
need be said. But here in this lonely landscape of endless sugarcane fields
stretching far, far into the horizon, farmers cannot help but
feel that something remains amiss with the Comprehensive
Agrarian Reform Program (CARP). In fact, all they have to do is point to the sprawling
Hacienda Tinang sugar estate here that was awarded under CARP to
77 members of some of the country's wealthiest families --
investment bankers, socialites, businessmen, and friends and
relatives of the country's top politicians.
The surnames alone of these CARP beneficiaries are dead
giveaways of their privileged background: Jalandoni, Rufino,
Panicucci, de Leon, and Escaler -- including Ernest Escaler, the
flamboyant and high-flying businessman-investment banker who two
years ago got embroiled in a bribery scandal related to the
IMPSA power plant contract. These individuals reside in posh condominiums and exclusive
enclaves like Dasmarinas Village, New Manila, Ayala Alabang, and
Forbes Park. They have never lived here and have never tilled
the land nor managed it. They even include a junior high school student now enrolled
in Canada and who was less than 10 years old when he and other
members of his clan became "farmer-beneficiaries" of their own
212-hectare estate.
CARP was supposed to empower the peasantry and eradicate
rural poverty by giving land to the poorest. But since its inception, landed interests have been resisting
CARP -- and succeeding. In an agricultural community like Tinang, what makes this
possible are the feudal relations between farmers and
landowners, as well as political patronage between the elite,
and the bureaucrats and local officials implementing the land
reform program.
Under CARP, farmer-beneficiaries are supposed to be landless
residents of the barangay or the municipality where the land is
located, and had done direct work on it, whether as tenants or
regular or seasonal farm workers. But here in Tinang, members of the rich de Leon clan found a
way to keep their land through the Voluntary Land Transfer (VLT)
scheme, a method of land distribution that requires no
government money and minimal intervention from the Department of
Agrarian Reform (DAR).
How they did that and how this remained undetected for nearly
a decade exposes the many flaws of a program that was supposed
to be the cornerstone of former President Corazon Aquino's
social justice agenda. "If you ask me: 'Are we tenants? Are we farmers?' No, we're
not," says Michael Escaler, a 54-year-old member of de Leon
clan, which owns the Tinang hacienda. "Are you asking me how I got there, how it happened? I have
no idea." Escaler is a sugar miller and shareholder of the
National Life Insurance Corp. Yet his signature, as well as those of his relatives, appears
on numerous documents now on file at the Municipal Agrarian
Reform Office in Concepcion, Tarlac. The documents entitled them
to individual Certificates of Land Ownership Award or CLOAs, now
filed at the Tarlac Register of Deeds. CLOAs are titles to the
land supposed to be given only to the landless
farmer-beneficiaries.
Controversies have hounded CARP's implementation since it
began in 1988. But many of the problems that have surfaced have
had more to do with disputes over land bought by the government
under the compulsory acquisition and voluntary-offer-to-sell
(VOS) schemes. Much has been said, too, about landowners'
resistance to land valuation by the Land Bank of the
Philippines. Apparently, however, landowners were also trying out the VLT,
which soon became one of the more convenient ways for them to
get the government off their backs on the issue of land reform.
Aside from Tinang, other VLT cases include the 11 haciendas
totaling nearly 5,000 hectares owned by businessman Eduardo
Cojuangco Jr. in Negros Occidental. These landholdings have been
the subject of protests by restive farm workers who say Mr.
Cojuangco retains control over the land, despite having
submitted them to a VLT scheme. In the case of the Tinang estate, Mr. Escaler says, "I'm just
guessing, but maybe we gave 75% to the planters or the tenants.
And maybe the balance that was declared was divided among the
heirs. I think that's probably what happened." As to how his
signature got on the CLOA papers, he explained that he may have
just signed them without bothering to check what they were. Says
Escaler: "I will just sign it if you tell me to sign it." Farmers here acknowledge that the de Leons did give up part
of their land in Tinang planted to rice and corn back in the
1970s under then President Ferdinand Marcos's land reform
program. More than 200 hectares planted to sugarcane, however,
remained in the family. But CARP soon caught up with them, and by the 1990s, the de
Leons were supposed to let go of the sugar land. CARP allows
landowners to retain some of their property, but as DAR records
show, the de Leons managed to circumvent the limits set by law.
Under the law, landowners are allowed to retain five hectares
each, and their children, if they qualified, three each. But the
landowners comprising 11 de Leon siblings did not apply for
retention, and opted for the VLT scheme, an arrangement whereby
landowners voluntarily sold all their land to qualified
farmer-beneficiaries. The "buyers" of the de Leon property, however, were not
landless tenants, farm workers, or tillers that the law said
farmer-beneficiaries had to be. Instead, they were the de Leon
landowners' children and grandchildren who claimed, in documents
signed and submitted to the Municipal Agrarian Reform Office, to
be farmers and farm workers in the de Leons' employ, and
residents of this barangay.
These documents were prepared with the help of the barangay
captain, acting as representative of the Barangay Agrarian
Reform Council (BARC). The barangay captain is the son of the de
Leons' caretaker and belongs to a family that residents say is
much feared in the village. Last year, this barangay captain
took over his father's position as the de Leons' overseer. "This is tantamount to misrepresentation and grounds for the
revocation of the VLT," says DAR Assistant Regional Director for
Operations Teofilo Inocencio. He also says the DAR Region III is
planning to create a Task Force to look into the de Leon case.
Yet in 1995, Inocencio was provincial agrarian reform officer in
Tarlac; it was he who gave final approval to the de Leon VLT. The de Leon property here in Tinang shares boundaries with an
equally controversial landholding of another branch of the
Cojuangco family, Hacienda Luisita.
But unlike the Cojuangcos, the de Leons have never lived in
their Tinang estate, which was titled in the name of 11 de Leon
siblings who married into similarly wealthy clans such as the
Escaler, Madrigal, Jalandoni, Lichauco, and Prieto families.
Their offspring, in turn, married their cousins or into other
wealthy families such as the Osmeņa, Lopa, and Rufino families. Their names alone connote wealth and power in the
Philippines; their reach and clout in business, government,
media and even civil society are extensive. They also share
feudal and patronage ties with those in charge of implementing
CARP, making it rather simple for them to become CARP
beneficiaries and fend off a genuine land distribution program.
Aside from Ernest Escaler, the Tinang farmer-beneficiaries
include:
- Michael Escaler, a director of the National Life
Insurance Corp., he is also chairman and president of
Pampanga Sugar Development Co Inc. (PASUDECO), and president
and chief executive officer of Sweet Crystals Integrated
Sugar Mills (SCISM). He runs a firm called All Asian
Countertrade as well.
- Michael Escaler's wife and cousin, Patricia de Leon.
Under the CARP law, a married couple is considered one
conjugal unit entitled only to a maximum of three hectares.
Michael and Patricia de Leon-Escaler got three hectares
each.
- Juan, Mark, and Margarita Escaler, all shareholders in
PASUDECO.
- Francis Escaler, a stockholder both in PASUDECO and
Sweet Crystals Integrated Sugar Mills. The Escalers are also
heirs of Ernesto Escaler, former chief operating officer of
Pepsi Cola, and a relative and associate of former Marcos
crony Eduardo M. Cojuangco, Jr.
- Marie Yvette L. de Leon, director of National Life
Insurance Corp.
- Marissa Therese de Leon, married to Gabriel Lopa, nephew
of former President Aquino. (The document submitted,
however, shows she is married to "Luis Lopa." Her son, Luis
de Leon Lopa, is also listed as a farmer beneficiary but the
documents show he was 23 years old at the time of the land
transfer in 1995. A farmer-beneficiary has to be at least 15
years old. Friends of the de Leons say Luis de Leon Lopa is
currently a junior high school student in Canada, meaning he
was less than 10 years old at the time of the land
transfer.)
- Alfredo de Leon Panicucci, a businessman who imports
clothes and runs the Linea Italia stores.
- Gabriel de Leon, who is listed as one of the top 100
stockholders of the Bank of the Philippine Islands.
- Eight farmer-beneficiaries belonging to the de
Leon-Madrigal branch, descendants of Don Vicente Madrigal,
businessman-industrialist and former senator who owned,
among many other companies, the Madrigal Shipping Lines.
They are also related to newly elected Senator Jamby
Madrigal.
- Felina Maligaya, who is listed as a stockholder of
Daniel Agricultural Corp. owned by the de Leon-Jalandoni
branch of the family.
The land and the family that owns it both have a colorful
past closely intertwined with the nation's political and
economic history. The de Leon land used to be part of the
1,200-hectare Hacienda Tinang once owned by the
revolutionary general Servillano Aquino whose huge
wood-and-brick house still stands in the center of Tinang.
In the book, "Aquinos of Tarlac", writer Nick Joaquin
narrates that the general bequeathed Tinang to his son Benigno
Sr. upon his marriage to Maria Urquico, daughter of another
wealthy Tarlac family. But Benigno Sr. was forced to hock the hacienda to finance
his activities when he became a member of the Philippine
Legislature from 1919 onwards. Mr. Joaquin says that as Tarlac representative, Benigno Sr.
refused to take money from the government; he donated his salary
to charitable institutions and personally funded his official
trips across the country and abroad. "What was left of my father's lands had been sold during the
war to feed us," Joaquin quotes the late Benigno "Ninoy" Aquino
Jr., as saying. "Most of them were already mortgaged before the
war: Murcia, Lawang, and Tinang."
How Tinang ended up with the de Leons is unclear. But the
Transfer Certificate of Title to the Tinang property indicates
that in the 1930s, ownership of the land passed into the hands
of Benigno Sr.'s brother-in-law Manuel Urquico, whom Mr. Joaquin
describes as "a speculator who lost something like
PhP25 million in the (US) stock-market crash of the
mid-30s." It could well be that Urquico sold the land to the de Leons,
who have long been prominent in neighboring Pampanga. Like other
landowners, the family made its wealth from lending money to
cash-strapped farmers and planters who had land to offer as
collateral.
The clan traces its roots to patriarch Jose de Leon, a
Pampango sugar planter in the early 20th century. In
"Sugar and the Origins of Modern Philippine Society", scholar
John Larkin classifies de Leon as among "the very rich (who)
created their fortunes by supplying credit mainly through the
pacto de retro: loaning money with land as collateral in good
times and bad (which) offered the surest way to profit." Mr. Larkin says that those who went on to amass greater
wealth, Jose de Leon included, "knew as well how to benefit from
harsh economic times," acquiring large parcels of land through
credit schemes for hard up farmers and planters in the years
after the Philippine revolution.
Mr. de Leon also invested in other ventures, including the
Pampanga Electric Light and Power Co. But his family is more
closely associated with PASUDECO, a company being managed at
present by descendant Michael Escaler. In its heyday in the
1920s, PASUDECO differed from sugar centrals in Negros in that
it was owned not by just one family, but by a group of families
whose names and corporations recur in this story. "PASUDECO was funded not by a single powerful native family
or by foreign capital but by a group of individual and family
interests in a kind of cooperative effort that reflected the
homogeneity, trust and myriad relationships that existed among
the Pampangan elite," Mr. Larkin writes.
Among the other prominent Kapampangans who invested in
PASUDECO were Augusto Gonzales, Manuel Urquico, Honorio Ventura,
Francisco Liongson, and Jose Escaler. Pampango historians say
Mr. Ventura was a politician who sent the brightest local
children to school, among them a boy from Lubao named Diosdado
Macapagal. Jose de Leon would eventually put up, along with other
investors, the National Life Insurance Company of the
Philippines, a firm now situated along Ayala Avenue in Makati,
the same building where some de Leon descendants and
"farmer-beneficiaries" still hold office.
Mr. Larkin recounts that Mr. de Leon died violently in 1939,
when he was gunned down in the heat of a dispute between sugar
planters and millers inside the PASUDECO offices. By then, he had amassed enough wealth to last many lifetimes
and withstand many generations. That wealth was passed on to his
son, Jose Joven de Leon, father of the siblings in whose names
the 212-hectare Tinang land was titled before it was placed
under CARP.
Court documents show that when Jose Joven de Leon passed away
in 1974, he left shares of stock in some 40 corporations that
included Bacnotan Cement Industries, Bank of the Philippine
Islands, and PASUDECO, as well as more than a hundred parcels of
residential, commercial, and agricultural land in Manila and the
provinces of Rizal, Pampanga and Tarlac. DAR's Inocencio even
quips that the de Leons have so much real estate property that
"they have no real idea where all their lands are." Many of their vast landholdings have been targeted for
coverage under CARP. The government is now processing payments
to the de Leon descendants for other property purchased by the
government under the CARP's Compulsory Acquisition scheme. To DAR and Land Bank employees then, the de Leons are
considered cooperative landowners.
That is, were it not for the infraction they committed in
their Tinang estate.
To be concluded tomorrow
NAMES OF
"FARMER-BENEFICIARIES" OF THE DE LEON ESTATE, THE LAND
THEY GOT, AND AMOUNTS THEY PAID FOR IT, AS APPEARING IN
TRANSFER CERTIFICATE OF TITLE NO. 129201. |
Name |
Area (sq. meters) |
Amount (in peso) |
Benjamin David
Escaler |
30,000 |
450,000 |
Roberta L. Anonas |
12,371 |
185,505 |
Stella Anonas |
30,000 |
450,000 |
Patricia De Leon |
30,000 |
450,000 |
Catherine Galvez |
30,000 |
450,000 |
Yvette L. De Leon |
30,000 |
450,000 |
Natividad L.
Jalandoni |
30,000 |
450,000 |
Teresa L. Jalandoni |
30,000 |
450,000 |
Gerardo Cornejo Jr |
30,000 |
450,000 |
Anna Cornejo |
30,000 |
450,000 |
Mario Cornejo |
30,000 |
450,000 |
Andrea Jalandoni |
30,000 |
450,000 |
Monica Jalandoni |
30,000 |
450,000 |
Juan Miguel Escaler |
25,377 |
380,640 |
Mark Vincent
Escaler |
25,375 |
380,640 |
Margarita Escaler |
25,376 |
380,655 |
Noel L. Escaler |
30,000 |
450,000 |
Ernest L. Escaler |
30,000 |
450,000 |
Michael L. Escaler |
30,000 |
450,000 |
Francis L. Escaler |
30,000 |
450,000 |
Michael John De
Leon |
30,000 |
450,000 |
Ma Theresa E. Dabao |
30,000 |
450,000 |
Lea Maria L. Palou |
30,000 |
450,000 |
Gabriel Antonio De
Leon |
30,000 |
450,000 |
Liza Irene L. Muņoz |
30,000 |
450,000 |
Carlos De Leon
Muņoz |
18,342 |
275,109 |
Marissa Therese De
Leon |
30,000 |
450,000 |
Jose De Leon III |
19,126 |
286,905 |
Luis De Leon Lopa |
18,341 |
275,109.90 |
Justine De Leon
Lopa |
18,340 |
275,110.05 |
Rafael Ma. De Leon |
30,000 |
450,000 |
Cristina Ines De
Leon |
30,000 |
450,000 |
Paul Vincent L.
Perez |
30,000 |
450,000 |
Rosanna Regina
Marie Ocampo |
30,000 |
450,000 |
Michaelle Perez
Gemperle |
30,000 |
450,000 |
John Marcel P.
Gemperle |
20,000 |
300,000 |
Leonora L. Perez |
20,000 |
300,000 |
Victoria L. Faicol |
22,594 |
338,925 |
Victor Juan L.
Sison |
29,351 |
440,251.50 |
Ma. Francesca Sison
Carreon |
29,350 |
440,251.50 |
Ma. Magdalena L.
Sison |
29,350 |
440,251.50 |
Juan Vicente L.
Rufino |
30,000 |
450,000 |
Gerard Anthony L.
Sison |
29,350 |
440,251.50 |
Simon Jose L. Sison |
29,350 |
440,251.50 |
Philip L. Sison |
29, 350 |
440,251.50 |
John Michael Andrew
L. Sison |
29, 350 |
440,251.50 |
Miguel Joaquin
Sison Carreon |
29, 350 |
440,251.50 |
Victor Vicente J.
Sison |
29, 350 |
440,251.50 |
Ma. Raquel
Christina C. Sison |
29, 351 |
450,000 |
Ma. Natividad De
Leon |
30,000 |
450,000 |
Vicente L. Rufino |
30,000 |
450,000 |
Ma. Elena Alba |
23,065 |
345,967.50 |
Jose Vicente De
Leon |
28,265 |
423,991.50 |
Susana De Leon |
28,266 |
423,991.50 |
Alejandro Ignacio
De Leon |
28,265 |
423,991.50 |
Miguel Antonio De
Leon |
28,265 |
423,991.50 |
Joanna Natividad
Jalandoni |
30,000 |
450,000 |
Denise Patricia
Jalandoni |
30,000 |
450,000 |
Javier Alejandro
Jalandoni |
30,000 |
450,000 |
Rafaela Jalandoni |
30,000 |
450,000 |
Elsa M. Delgado |
30,000 |
450,000 |
Rolando L. Zapanta |
30,000 |
450,000 |
Felina B. Maligaya |
30,000 |
450,000 |
Danilo S. Mariano |
30,000 |
450,000 |
Francis M. De Leon |
30,000 |
450,000 |
Felix Tanchanco |
30,000 |
450,000 |
David M. De Leon |
30,000 |
450,000 |
Alfredo L.
Panicucci |
30,000 |
450,000 |
Jose L. Panicucci |
30,000 |
450,000 |
Alessandra
Panicucci |
30,000 |
450,000 |
Angelita Escanlar |
3,235 |
48,525 |
Marianne G. De Leon |
13,283 |
199,245 |
Antonio G. De Leon |
13,283 |
199,245 |
Gian Paul Panicucci |
30,000 |
450,000 |
Anna Maria
Panicucci |
30,000 |
450,000 |
Rosemarie L.
Herbosa |
13,283 |
199,245 |
Gianinna L. Syjuco |
13,283 |
199,245 |
REGISTERED LANDOWNERS OF
THE TINANG ESTATE, PRIOR TO THE VOLUNTARY LAND TRANSFER,
BASED ON TRANSFER CERTIFICATE OF TITLE NO. 129201 |
Maria Luisa de Leon
|
married to Ernesto
Escaler |
Juan de Leon
|
married to Macaria
Madrigal |
Jorge de Leon |
married to Raquel
Gonzales |
Regina de Leon
|
married to Venicio
Jalandoni |
Salvador de Leon
|
married to
Margarita Gemperle |
Oscar de Leon
|
married to Virginia
Lichauco |
Benjamin de Leon
|
married to Beatriz
Prieto |
Trinidad de Leon
|
married to
Alessandro Panicucci |
Jose de Leon III
|
married to Sylvia
Montemayor |
Lydia de Leon
|
married to Victor
Sison |
Bernardita de Leon
|
married to Vicente
Perez |
|
|