ADB: LGUs lack technical, financial know-how in PPP implementation

To fill in the infrastructure gap at the local government level, Manila-based multilateral lender Asian Development Bank (ADB) has recommended coming up with specific guidelines that will cover local public-private partnership (PPP) projects.

In a report titled “Philippines: Public-Private Partnerships by Local Government Units,” the ADB noted LGUs have already been tapping PPP  arrangements to build infrastructure as early as 1991, the first of which was the commercial building used as a public market in Mandaluyong City.

A number of LGUs pursued big PPP projects not only in infrastructure but also in power generation and bulk water supply in the subsequent years, but some of these initiatives “met many obstacles along the way,” the ADB noted.

Major impediment

According to the report, “lack of technical and financial resources for project preparation, monitoring, and implementation has always been cited and continues to be a major impediment to LGUs undertaking PPP projects.”

“These needs have to be addressed simultaneously and comprehensively by technical assistance and financing facilities,” it said.

The ADB said LGUs should come up with guidelines on doing local PPPs through joint ventures.

“The lack of guidelines for LGUs forming joint ventures with the private sector has been the source of uncertainties for LGUs interested in that particular form of PPP, which does not fall under the ambit of the Build-Operate-Transfer Law, as amended,” the ADB said.

The Manila-based multilateral firm added LGUs can also enact their own PPP code or omnibus ordinance covering all applicable PPP modes.

Local PPP codes may include fiscal and nonfiscal provisions to better attract investors, it said.

Legal front

On the legal framework, the ADB recommended the following: Clarification of an approval authority for LGU PPP projects costing above P200 million; establishing a deadline for the confirmation of LGU PPP projects; streamlining National Economic and Development Authority-Investment Coordination Committee (ICC) and Regional Development Council review processes, including ICC forms tailored for LGUs; and clarifying the audit scope of national and local PPP projects done through joint venture arrangements.

The ADB also pointed out that a transparent regulatory body must be set up.

“Having a competent, independent, and transparent regulatory body in the sectors where PPPs are being welcomed is very important to protect the interests of all concerned—the customers, private investors, and government entities involved,” it said.

source:  Inquirer

Big business buys into QC land value audit

QUEZON City Mayor Herbert Bautista welcomed the participation of big businesses in the consultation of the proposed revised schedule of fair market values of land within the city.

He tasked the city council’s committee on ways and means to comply with the recommendation of the Commission on Audit and Department of Finance to update the city’s obsolete land and property values.

Among those who took part in last Thursday’s consultations at the city hall were SM Prime Holdings and Megaworld Corp.

“Quezon City is merely complying with the provisions of Republic Act 7160 and adjusting the schedule of the fair market values based on real-estate market realities, and to support various urban and social developmental projects of the administration,” city administrator Aldrin Cuña told the Manila Standard.

Cuna said the big businesses posed no objection to the proposed adjustment of property values.

Still, SM Prime Holdings and Megaworld Corp. urged the city government to grant tax incentives to small players or businesses with small capitals.

Fe Wong, tax officer of SM Prime Holdings, the parent company of the SM Group, said they are not objecting to the proposed legislation. 

“Yes we support it. We will submit our position paper later,” she said.

“We are definitely very supportive of this measure,” Megaworld corporate advisory and compliance division manager John Joseph Sy added. “We have always been supportive of the endeavors of the city government as long as it is beneficial to us and to the interests of our clientele, tenants, and buyers.”

Megaworld owns and developed  the 17-hectare Eastwood City, the commercial and residential property in Bagumbayan area.

Trade organizations such as the Association of Filipino Franchisers Inc. said they will look into the proposed adjustments.

“Yes, we support it. As much as we want to oppose it, we would appreciate having no increase, but the city government was able to explain that it has been a long time since the last increase,” said Rafael Canare, executive director of AFFI.

Canare appealed to Bautista to provide small businesses with tax incentives since they would expect an increase in leasing fees to be imposed by property owners, such as malls and commercial buildings affected by the adjustment of real property tax.  

SOURCE:  Manila Standard

Cagayan de Oro officials asked to explain dumpsite violations

CAGAYAN DE ORO CITY, Philippines – The Office of the Ombudsman summoned city mayor Oscar Moreno and other past and current local officials to answer the charges against them over violations of the Ecological Solid Waste Management Act.

Moreno, former city mayor Vicente Emano, and councilors of the 17th and 18th city council will face members of the Environmental Ombudsman in Davao City on Wednesday, October 26.

The charges against the city officials stem from the open dumpsite located in Upper Dagong, Zayas in Barangay Carmen.

The dumpsite has been one of the crucial issues that has haunted Moreno since he became mayor in 2013.

The dumpsite, covering 17 hectares of land, was designed to hold 1.8 million cubic meters of garbage. But recent figures showed that the dumpsite now holds twice that amount – at least 4 million cubic meters.

City's defense

City environment office chief Edwin Dael, one of the respondents in the case, said that city officials will present what they have done with the dumpsite since taking over in 2013.

Dael said he and Moreno fought off an Emano-dominated city council that denied a budget proposal from Moreno for the controlled closure and rehabilitation of the dumpsite, and the opening of a new landfill.

"Despite the challenges, we were able to close and rehabilitate 50% of the Zayas dumpsite," Dael said.

"We are confident that with what we have done in 3 years, we will be able to defend our position. In the last administration, it was not their priority to comply with the law," he added.

In 2010, the city government sought the assistance of the Environment Management Bureau-Department of Environment and Natural Resources (EMB-DENR) in Region 10 for a proposed new landfill project.

But EMB-DENR Assistant Regional Director Sabdullah Abubakar said the proposed 30-hectare landfill in Barangay Pagatpat was not approved.

The P300-million project was too expensive, and the land suggested by the city was not a suitable site.

The city government of former mayor Emano instead focused on privatizing the garbage collection of the city.

New landfill proposed

The city's environment chief said a new sanitary landfill in Barangay Pagalungan is now pending approval.

The 25-hectare site, located 17 kilometers from the city proper, will be able to accommodate 20 years worth of garbage.

Dael said the proposed sanitary landfill will have modern garbage technologies, including methane gas harvesting and leeching pipes, among others.

Scavengers will also be banned from the new landfill.

Dael added that the city has strengthened its garbage collection at the barangay level.

“It is mandated by the law that the barangay will enforce the law, starting with the in-source garbage segregation, frameworks on garbage collection," Dael said. – Rappler.com

Agusan Sur mayor, 6 others charged over land deal

THE Office of the Ombudsman has found basis to file graft and technical malversation cases before the Sandiganbayan against Mayor Johnmark Billanes of Trento town in Agusan del Sur over alleged irregularities in a P1-million land deal brokered with his brother in 2012.

Also facing indictment for alleged graft are former Vice Mayor Victoria Plaza; Sangguniang Bayan members Edwin Demegillo, Pedro Mordeno and Leona Magno; incumbent Sangguniang Bayan member Ludy Andale; and the mayor’s brother Romeo Billanes Jr., owner of the 7,775-square-meter property located along the national highway of Poblacion in Trento.

The Ombudsman’s ruling is subject to a motion for reconsideration.

A statement issued by the Ombudsman on Wednesday said the accused officials allegedly gave unwarranted benefits, advantage or preference to Romeo supposedly through manifest partiality or evident bad faith because his property was allegedly identified for acquisition prior to the appraisal of the land.

The Ombudsman further alleged in its resolution that no ordinance was passed by the Sangguniang Bayan to realign the P1-million fund and the land acquisition was for a different purpose from the original appropriation.

To facilitate payment, the Sangguniang Bayan allegedly passed a resolution supposedly to borrow P1 million from the 2012 appropriations for the rehabilitation of the farm-to-market road to finance acquisition of lot for the proposed rice processing center.

The Ombudsman also found Billanes, Demegillo, Plaza, Andale, Mordeno and Magno administratively liable for grave misconduct and conduct prejudicial to the best interest of the service and ordered their dismissal.

The accused also face cancellation of eligibility, forfeiture of retirement benefits and perpetual disqualification from reemployment in the government service.

In its decision, the Ombudsman directed the Department of the Interior and Local Government to implement the dismissal order, which is convertible to a fine in case the respondents are no longer in the service.

source:  Manila Times

Payment under protest: Local business tax

Local government units (LGUs) are constitutionally granted the power to generate their own sources of revenues. This power necessarily includes devising procedures and remedies aimed at providing means for the effective and efficient collection of taxes. Such rules, however, which are enacted through local tax ordinances, should be made in accordance with the guidelines and limitations set by Congress through the Local Government Code (LGC) of 1991, and its amendments.

Controversies usually arise when there are differences between the guidelines provided in the LGC and in the local tax ordinance. One area where differences are usually encountered is with respect to the remedies available to taxpayers in contesting tax assessments issued by LGUs. There is no doubt that under the LGC, when an LGU issues a notice of assessment, the concerned taxpayer may contest the assessment by filing a written protest within a prescribed number of days from the receipt of the assessment. The same rule had been incorporated in the local revenue codes of LGUs.

The controversy lies on the requirement by some local revenue codes for the payment under protest, before said protest can be entertained. With respect to real-property taxes, this is not an issue since the LGC is explicit on this matter. To be specific, Section 252 of the said code provides that no protest shall be entertained unless the taxpayer first pays the tax. This is very specific to real property-tax assessment.

There is no similar provision insofar as local business-tax assessment is concerned. In the absence of a specific provision in the LGC, some LGUs have applied the same rule required in protesting real property-tax assessment. These local governments contend that since there is no prohibition in applying the rules in real property-tax assessment, the LGU is not prohibited from extending the same requirement in local business-tax assessment. To them, this is part of the power granted to the LGUs to devise means to accomplish tax collection in an effective manner. Hence, some local revenue codes include provision similar to real property-tax assessment requiring payment as a condition for the validity of a protest against local business-tax assessment.

This is one of the issues brought before the Court of Tax Appeals in C.T.A. AC 139, promulgated on August 11. In this case, the city treasurer of Davao refused to act on the protest of the taxpayer assailing the assessment of deficiency local business taxes. The city treasurer did not act on the protest because there was no prior payment as required by the Revenue Code of the city. The court ruled that payment under protest is not required for local business taxes. The court reminded the basic rule that all ordinances should be in conformity with the law. Since payment under protest is not required under the LGC, a local ordinance cannot require such prior payment. In fact, the court held that the city of Davao should not supply additional requirements onerous to the taxpayer. The provision in the Revenue Code of Davao has no legal basis.

With this ruling, it is hoped that the issue will be finally put to rest. Requiring payment under protest in contesting real property-tax assessment is acceptable and reasonable and with legal basis, but certainly not for local business-tax assessments.

 ****

The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member- firm of World Tax Services (WTS) Alliance.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice.  If you have any comments or questions concerning the article, you may e-mail the author atayesha.matanog@bdblaw.com.ph or call 403-2001 local 170.

No double jeopardy yet even if complaints filed only before ‘barangay’ officials

Dear PAO,
Last month, my father filed a complaint before barangay (village) authorities because of physical injuries he sustained in a fight with a neighbor. But he was not able to attend hearings on his complaint because he had to watch over my younger sister who was hospitalized. Besides, it was only last week that my father was able to obtain his medical certificate from the hospital where his injuries were treated. It says in the certificate that it will require him 10 to 15-day medication. He went to the village officials and was told that his complaint was not completely acted upon because it was only the neighbor whom he had fought with who showed up in the three hearings set by the barangay chairman.

My father is considering to refile his complaint but our neighbor said it cannot be done because there is already double jeopardy. Is that correct? Has the crime also prescribed? Please advise me on this matter.
Alyssa

Dear Alyssa,
The principle of double jeopardy provides a barrier to the filing of a second or subsequent complaint against a person who has already been convicted or acquitted of the same offense. This principle is expressly provided for under Section 21, Article III of the 1987 Philippine Constitution, which states that “(n)o person shall be twice put in jeopardy of punishment for the same offense. If an act is punished by law or an ordinance, conviction or acquittal under either shall constitute a bar to another prosecution for the same act.”

It bears stressing, though, that all the elements of double jeopardy must be present in order for such barrier to attach, to wit: (a) that there has been a valid indictment, (b) such indictment was before a competent court, (c) that it was made after arraignment, (d) after a valid plea having been entered; and (e) that the case was dismissed or otherwise terminated without the express consent of the accused (Icasiano vs. Sandiganbayan, G.R. No. 95642, May 28, 1992).

In the situation that you have presented, we believe that there is no double jeopardy yet considering that the elements thereof are wanting. It is true that your father has filed a complaint against your neighbor but such was only filed before the barangay. While the barangay provides an avenue for parties to amicably settle their disputes and the complaint is well within the jurisdiction of the barangay, such is not considered as a “competent court.”

Corollary thereto, your father may refile his complaint before the barangay if conciliation proceedings concerning the complaint, which he filed last month, has been terminated because of his non-appearance. As mentioned and contrary to what your neighbor claims, there is no double jeopardy yet.

It is also important to note that the complaint may still be filed since the crime has not yet prescribed. Under the Revised Penal Code, the imposable penalty for the crime of less serious physical injuries is arresto mayor or imprisonment for one month and one day to six months. Crimes with such penalty prescribe in five years (Article 265 in relation to Articles 27 and 90, Ibid.). Considering that only a month has passed since the altercation between your father and your neighbor, it is well within the five-year prescriptive period. Hence, it may still be refiled before the barangay.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

Monthly dialogues set

THE European Chamber of Commerce of the Philippines (ECCP) said it would hold monthly dialogues with local government units (LGUs) to identify growth areas outside Metro Manila ahead of the country’s planned shift to the federal system.
Henry J. Schumacher, ECCP senior advocacy adviser, said Interior Undersecretary Austere A. Panadero has invited the ECCP, which has over 800 member companies operating across the country, for talks every month.

“[T]hat makes a big difference. Now we can ask our members who face challenges or see opportunities with LGUs to join these constructive interactions,” read a statement quoting Mr. Schumacher and sent to journalists yesterday.

“The government is looking at decentralization and regionalization. We have started it.”

President Rodrigo R. Duterte in his inaugural address had urged Congress to amend the Philippine Constitution to pave the way for federalism, where the power to govern is shared between national and state governments. That bid gained some ground on his first month in office but the debate fizzled out somewhat amid disagreements over how to do the shift. Mr. Duterte had said he wants the shift done before he ends his term in 2022.

“We have to understand that we have to drive more investments in Visayas and Mindanao,” Mr. Schumacher said.

The group would start the regular dialogue with select LGUs across the three major islands, such as Puerto Princesa for Luzon, Tuburan (a second income class municipality in Cebu) for Visayas, and Cagayan de Oro for Mindanao.

“By having regular dialogues with the government, we will create opportunities to jointly address the challenges as far as promoting sustainable business and inclusive growth at the local level,” ECCP President Guenter Taus said in the statement. -- RSCC

source:  Businessworld

Makati forum shopping over Bonifacio row: SC

THE Supreme Court (SC) has found Makati City guilty of forum-shopping for pursuing two simultaneous legal actions against a Pasig City court regarding a dispute on jurisdiction over part of Fort Bonifacio.

In a 27-page decision dated June 15, the SC Second Division said the city, through its lawyers, was “guilty of direct contempt” for engaging in forum shopping.

It imposed a fine of P2,000 each on the city’s three counsels: Pio Kenneth I. Dasal, Glenda Isabel L. Biason, and Gwyn Gareth T. Mariano.

The case was an offshoot of Makati City’s dispute with Taguig City over 729.15 hectares of land occupied by the inner Fort Bonifacio barangays (Post Proper Northside and Post Proper Southside) and the seven Enlisted Men’s Barrios barangays (whose names end in “EMBO”). The area contains the lucrative Bonifacio Global City.

The high court did not tackle the dispute itself, as an appeal by Taguig City over the July 30, 2013 decision in Makati City’s favor remains pending before the Court of Appeals (CA) Sixth Division.

Makati City initially lost the legal battle, after Pasig City Regional Trial Court (RTC) Branch 153 Judge Briccio C. Ygaña issued a July 8, 2011 decision that ruled the area a part of Taguig City. Makati City, however, questioned the judge’s jurisdiction, claiming the decision was only antedated and issued after he retired on July 9.

In response, Makati City petitioned the CA to annul Mr. Ygaña’s judgment, while simultaneously filing a motion for reconsideration (MR) ad cautelam with the Pasig RTC -- a “precautionary” appeal of the decision while rejecting the judge’s jurisdiction.

The CA Former Seventh Division dismissed the petition to annul the judgment in December 2012 on the grounds of forum-shopping, although the court later dropped this finding in an April 2013 resolution that only junked the case for prematurity.

The MR ad cautelam tackled by Pasig RTC Judge Leili Cruz Suarez (who took over Mr. Ygaña) also resulted in a loss for Makati City. But when the case was elevated before the CA Sixth Division, the city prevailed in the July 2013 decision now being appealed by Taguig City.

The high court agreed with Taguig City that Makati City should be sanctioned for forum-shopping, and said the lawyers had no justification for simultaneously filing the petition for annulment and the MR ad cautelam.

The decision, penned by Associate Justice Marvic M. V. F. Leonen, noted that Makati City’s contention about the just-retired judge could have been raised in the MR.

“It was not as though respondent was left with no other remedy... Lack of jurisdiction could have just as easily been raised as an error in its Appeal or in its Motion for Reconsideration,” it read.

The high court added that Makati City’s actions even gave rise to harm as the RTC began conflicting with the CA. While the RTC found the city guilty of forum-shopping, the CA, as narrated above, “strangely flip-flopped” on the issue.

“Respondent City of Makati’s actions have not only vexed courts as an adverse litigant. They have actually and already given rise to conflicting decisions, not only between different courts -- the RTC and Court of Appeals -- but even within the Court of Appeals itself,” the decision said.

The high court also criticized Makati City’s actions as “a contumacious attempt to obfuscate the resolution of cases through the abuse of legal processes.”

source:  Businessworld

Counting terms: Jurisprudential guidelines on the three-term limit rule for local elective officials

The euphoria of the 2016 elections may have died down but some legal issues are yet to be resolved by the courts and the Comelec. A number of these cases may relate to the proper interpretation of the “three-term limit rule” for local elective officials.

This disqualification rule, as enshrined under Section 8, Article X of the 1987 Constitution and reiterated in Sec. 43 (b) of the Local Government Code of 1991, prohibits local elective officials from serving more than three (3) consecutive terms in the same position. It ensures that there is a change in leadership every after three consecutive terms of a local elective official to give chance to some other qualified individuals. Although the rule appears to be simple, the same has been a fertile ground for disputes stemming from varying interpretations of said rule.

In Abundo v. Comelec (2012), the Supreme Court laid down the following requisites for the applicability of the rule: (1) that the official concerned has been elected for three consecutive terms in the same local government post; and (2) that he has fully served three consecutive terms.

The Abundo ruling likewise summarized various cases where the applicability of this rule was tested. These cases relate to: (1) assumption of office by operation of law, (2) assumption of office after winning a recall election, (3) conversion of a municipality to a city, and (4) declaration of the proclaimed candidate as the losing party in an election contest, and other analogous cases.

ASSUMPTION OF OFFICE BY OPERATION OF LAW
In Borja, Jr. v. Comelec (1998), Capco was elected vice-mayor but he eventually succeeded as mayor by operation of law due to the death of the incumbent mayor. Capco was then elected as mayor for two more terms after his assumption by operation of law. On his third attempt to re-election, his disqualification was sought. The Supreme Court held that “it is not enough that an individual served three consecutive terms in an elective local office, he must also have been elected to the same position for the same number of times before the disqualification can apply.” Thus, the initial assumption by operation of law was not counted for purposes of the three-term limit rule.

ASSUMPTION OF OFFICE AFTER WINNING IN A RECALL ELECTION
In Socrates v. Comelec (2002), Hagedorn was elected and served as mayor for three consecutive terms. After that Hagedorn opted not to run for the next elections, in which Socrates eventually won. However, while serving his term, Socrates faced recall proceedings. Hagedorn ran for the former’s unexpired term, so Socrates sought his disqualification. The Supreme Court upheld Hagedorn’s candidacy to run in the recall election, since after his third term “he became a private citizen until the recall election” where he won.

CONVERSION OF A MUNICIPALITY INTO A CITY
In Latasa v. Comelec (2003), Latasa served as Mayor of the Municipality of Digos for three consecutive terms. During his third term, Digos was converted to a component city. When he filed his candidacy for city mayor, the Supreme Court ruled that “the conversion of a municipality to a city does not constitute an interruption of the incumbent official’s continuity of service.” Thus, the rule was applied.

LOSING IN AN ELECTION CONTEST
In Lonzanida v. Comelec (1999), Lonzanida was elected and served as mayor for three terms from 1989-1998. However, his proclamation relative to the 1995 election (for his 3rd term) was declared as null on the ground of failure of elections. Three months before the 1998 elections, Lonzanida vacated the mayoralty post. In the May 1998 elections, Lonzanida again filed his certificate of candidacy. This was questioned by his opponent.

The Supreme Court held that “Lonzanida cannot be considered as having been duly elected to the post in the May 1995 elections since his assumption of office as mayor cannot be deemed to have been by reason of a valid election but by reason of a void proclamation.” It was also stated that “Lonzanida did not fully serve the 1995-1998 mayoral term having been ordered to vacate his post before the expiration of the term, a situation which amounts to an involuntary relinquishment of office.” Thus, the rule did not apply.

Contrast this to Ong v. Alegre (2006), Ong was elected and served as mayor for three terms from 1995-2004. During the 1998 elections, the Comelec nullified Ong’s proclamation on account that he lost during the 1998 elections. Nonetheless, the decision became final and executory on July 4, 2001 when Ong had fully served the 1998-2001 term and was in fact already starting to serve the 2001-2004 term. In 2004, he filed his certificate of candidacy for the same position which his opponent questioned. Ong invoked the ruling in Lonzanida.

The Supreme Court held that “his assumption of office as mayor for the term 1998-2001 constitutes service for the full term.”Lonzanida did not apply because the conditions are different. Ong was deemed to have served for a full term because Ong’s proclamation was voided only after the expiry of the term. It was further noted that “the decision declaring Ong as not having won the 1998 elections was without practical and legal use and value.” “His proclamation as the duly elected mayor in the 1998 mayoralty election coupled by his assumption of office and his continuous exercise of the functions thereof from start to finish of the term, should legally be taken as service for a full term in contemplation of the three-term limit rule.”

Based on the foregoing, the rule is applicable for as long as a local elective official (1) has been elected and (2) had served for three consecutive terms in the same position. As such, an official who merely assumed office by operation of law can run for the same position for three consecutive terms since he was not elected to the position. Likewise, an officer who has been elected and had served three consecutive terms will not be disqualified to run for a recall election for the same position since there has been an interruption in the continuity of terms of office after his third term. Lastly, an official who did not serve a full term for having been declared to have lost an election contest can still run for the same position since the requirements are not complied with.

On the other hand, the rule is applicable to disqualify a local elective official to run for a fourth consecutive term over the same position even if the municipality has been converted into a city, or when a local elective official has been declared to have lost an election only after he had already served his full term.

Reynold L. Orsua is an Associate of the Litigation and Dispute Resolution (LDRD) of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

source:  Businessworld

Federalism 101: Meaningful autonomy, virtues and frailties

Venezuela is the poster boy for how mindless populism runs an economy down to the ground. The country is on a free fall and Venezuelans are teetering on the edge of starvation. It is also a poster boy for how not to organize a federal system. Two centuries after its founding as a federal state in 1811, it has still to find a federalism that works. It has oscillated from the original decentralized federalism to a “Centralized Federal State” of the 1999 Constitution to the “transitional constitutional regime” where the president enjoys decree-making powers. Along the way, the central state has so disemboweled the subnational states that all the possible virtues that can adorn federalism have folded their tents and departed.

What are the possible virtues and frailties of meaningful federalism? My perspective will be economic and will be limited. Everything depends upon meaningful autonomy. With meaningful autonomy, these are possible: first jurisdictional competition: subnational states can engage its fellow states in competition for investments via lower taxes or more market-friendly labor policies in the same way that countries compete. One of the great attractions of PRC as investment destination is that labor unions are illegal. A sub-state can choose from different economic models, say, South Korea or North Korea as autonomy allows. The fate of the whole economy is thus not a wagered upon one model. It is risk diversification at the policy level. Modern Venezuela has, however, evolved no more than meaningless autonomy.

Second is that subnational states will implement a national policy as suits its needs and complimentary assets.

A good example is the agrarian reform policy in India: different subnational states implemented different types of agrarian reform of which the three most important are (Banerjee and Mookherjee, 2005; 2007): (1) tenancy reform which changed the contractual terms in favor of tenants in rural India (crop shares and security of tenure associated most with Operation Barga in Punjab and West Bengal); (2) land ceiling and redistribution: imposed land ownership ceilings and the redistribution of land in excess of the ceiling (Kerala and CARP Philippines); (3) the abolition of tax farming intermediaries, the zamindari system. The robust favorable result on poverty reduction and farm productivity heavily favored contract and bargaining reform while land ceiling and acquisition produced the opposite result. The already agriculturally affluent Punjab and West Bengal benefited. The framers of CARP followed Kerala and got the same sad outcome. So one possibility under meaningful federalism is that land reform in the Philippines will diversify for the good.

The third virtue of the federal system comes via the Buchanan-Nozick federalism: the sub-states will differentiate by local public goods and citizens can vote with their feet -- locate in states whose the Constitution and the local public goods congrue best with their individual values. One state may combine high income taxes with quality publicly provided local public goods and services (Scandinavian welfare state) and another combines low income taxes with less publicly and more privately provided public goods (most LDCs and the Philippines). This circumscription of citizen values by Tiebout voting (effectively violating the Arrow axiom of universal domain) avoids the Arrow paradox of democracy. A federal system like the Swiss cantons acts to homogenize the sub-state population and preferences thus enabling, for example, the median voter theorem.

Fourth is the “tragedy of the commons” argument: In presidential states viewed as a failure by its polity, different subnational groups will retreat to their own subgroups who view fiscal resources of the center as a common resource: they will play a zero-sum game of “grab as grab can”; in those same presidential states, “who pays and who loses” may not be very palpable because the contested resource is large and the competing claimants are numerous and faceless. When federated, the contested subnational state’s common resource as well as the number of claimants are smaller resulting in more visibility and salience on “who pays and who loses.” This should induce greater vigilance and accountability over the allocation and use of local resources -- the classic argument for most decentralization effort.

But the frailties of meaningful federalism are also compelling: arterial infrastructure (those that span sub-national state jurisdictions) will find it harder to be engendered for two reasons: increased approval hurdles (we already experience this with the Local Government Code); two, because the fraction of fiscal resources in the control of the center decreases (as in, say, the Pimentel Plan), it is less able to bankroll those public works, ceteris paribus.

And then there is the equalization transfer issue: cross jurisdiction inequality will rise because capacity of the center to effect fiscal transfers (Internal Revenue Allotment) to poorer jurisdictions will fall -- the Calabarzon region for example will retain more of its huge tax revenues while poorer regions such as ARMM can expect less in the form of IRA. Again cross jurisdiction mobility will mitigate but not eliminate this problem for citizens and household who can move. Poverty will thus rise in these poorer sub-states even as it drops in richer ones.

It is now canonical in the post-Piketty Capital era that income inequality will rise in market economies unless there is a determined pushback by the state. The capacity of the state to do that by transfers (say with an expanded CCT) will be diminished. It is a good bet that,ceteris paribus, net poverty incidence will rise.

Finally, the centrifugal risk: a successful sub-state in a national collective viewed as a failure will be tempted to go it alone (“Brexit” in EU, Catalan exit in Spain). The presence of a sub-state president and legislature makes it easier to bolt. If the economy tanks under the Duterte or subsequent presidency, the rush to the door will forthcome.

A paradox emerges: If Duterte turns out to be a gale force for the good, meaningful federalism will cramp his style. If Duterte turns out to be a force for the bad, meaningful federalism can limit the damage. This conservative posture may not jibe well with voters’ electoral expectation.

Of course, Duterte can always do a Hugo Chavez: chip away at federal autonomy using emergency decree-making powers and run the Philippine economy to the ground. Le plus la meme chose? Whether power is presidential or federal, only correct policies will redeem it.

Raul V. Fabella the chairman of the Institute for Development and Econometric Analysis, a professor at the UP School of Economics, and a member of the National Academy of Science and Technology.

source:  Businessworld Column

Introspective
Raul V. Fabella

Amicable settlement can be enforced by village ‘lupon’

Dear PAO,
My neighbor and I entered into an amicable settlement over my vehicle, which he had damaged in an accident. Under such settlement, he agreed to pay me P 3,000.00 a month for twelve months starting January 2016. He, however, has not paid me anything. May I enforce our agreement?

Sincerely yours,    
BJ

Dear BJ,
For your information, Articles 416 and 417 of Republic Act (RA) 7160 or the Local Government Code of the Philippines, states:

SEC. 416. Effect of Amicable Settlement and Arbitration Award. – The amicable settlement and arbitration award shall have the force and effect of a final judgment of a court upon the expiration of ten (10) days from the date thereof, unless repudiation of the settlement has been made or a petition to nullify the award has been filed before the proper city or municipal court. However, this provision shall not apply to court cases settled by the lupon [village council] under the last paragraph of Section 408 of this Code, in which case the compromise settlement agreed upon by the parties before the lupon chairman or the pangkat [group] chairman shall be submitted to the court and upon approval thereof, has the force and effect of a judgment of said court.

SEC. 417. Execution. – The amicable settlement or arbitration award may be enforced by execution by the lupon within six (6) months from the date of the settlement. After the lapse of such time, the settlement may be enforced by action in the appropriate city or municipal court.

Clearly, when you and your neighbor settled your differences in the barangay [village] and you came up with an agreement relative to that, the same is considered of force and in effect ten (10) days after its award or agreement, if the same is not duly repudiated. Within six (6) months thereafter, the same maybe executed by the barangay lupon, but beyond that time, the filing of a Motion for Execution before the proper Municipal/Metropolitan Trial Court becomes the proper remedy, which is apt in your situation.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

Just days before he assumed the Presidency, Mayor Rodrigo Duterte unveiled a mammoth master plan for a P39-billion Davao Coastline and Port Development project.

A joint venture agreement was signed June 21 by the Davao City government and Mega Harbor Development Corporation. The project covers 200 hectares from the existing Sta. Ana Wharf to the Bucana area, where the Davao River flows out to the gulf.

Under the plan, Mega Harbor will begin with the reclamation of four islands. The first of the four islands will host a modern port with berthing length of 2.5 kilometers.

The second and third islands will be devoted to mixed-use components. The City of Davao will get about five hectares for its own use. The three islands will be linked to the mainland by a common access road.

The fourth island will feature a residential component, including a relocation site for the affected settlers. It will have its own access to the mainland.

As things happen in Davao City, this huge undertaking is expected to progress very quickly. Mega Harbor announced the company would be complying with the necessary permits within the year. The project development group, meanwhile, is now completing its assessment of the traffic, social and environmental impact of the project.

This large project was approved by the City Council last April 12, as undergoing a Swiss Challenge where possible contenders could offer lower bids for the original proponent to match. The entire package will be completed at no cost to the city.

Residents that might be affected by the project will be offered relocation to medium-rise building to be constructed within the project area. The whole project will be organized on the theme of “Green Urbanism” and promises to be a world-class city.

The most notable thing about this project is that it was unsolicited.

The proponents built a design and proposed it to the City Council on a joint venture arrangement. The City Council, for its part, examined the project, looked at its environmental impact and the social costs of relocating the settlers to be displaced. Then they approved it, as simple as that.

This departs quite sharply with the method and policies associated with public-private partnerships during the Noynoy Aquino administration.

To begin with, no unsolicited proposals were entertained. This foreclosed any bright ideas that might emanate from the private sector.

Then, the Noynoy administration looked at the front-end revenues to be made from a PPP project. This was an oppressive inclination. It forced private investors to cough up huge sums for government’s share of the program, in most cases undercutting viability of the project or forcing consumers to pay for the exorbitant front-end costs.

It will do well for the bureaucrats of the Aquino era to look at this project in Davao City.

No front-end fees were paid government, only a share of the land to be developed. No additional costs were imposed that would have undermined the viability of the project.

The Davao project, hopefully, serve as the model of how things could be done from hereon.

source:  Philippine Star Column of Alex Magno 

‘Less than 1 percent of LGUs ready for disasters’

LESS than one percent, or only 160 out of 1,700 local government units (LGUs), have existing action plans to deal with disasters, a fact that makes poor people more vulnerable to calamities, according to an official of the Climate Change Commission (CCC).

CCC Secretary Emmanuel de Guzman said the discovery compels them to require all the LGUs to formulate their respective local climate change action plans (LCCAPs) by the end of next year.

He noted that an action plan will enable the LGUs to increase the capacities of local communities to reduce disaster risk and adapt to climate change.

“Each LGU should have a local climate change action plan as mandated by the Climate Change Act of 2009. Thus far, out of 1,700 LGUs including provinces, only 160 would have a plan,” de Guzman, vice chairman of the CCC, said.

The official added that there is an urgent and compelling need to enhance the capacity of the LGUs to adapt to climate change and reduce their vulnerability to weather-related disasters in order to protect the nation’s poorest, who bear the brunt of climate change impacts.

“Based on our timeline, we should have 500 plans by the end of the year and all the LGUs, municipalities, cities and provinces, should have their own LCCAP by the end of next year,” he said.

The absence of such action plans, de Guzman pointed out, is a “social sin” because it is contrary to the interest of the most vulnerable sectors of society.

“Non-action on climate and disaster risks is a social sin and a form of injustice to the poor and the most vulnerable,” he said.

With the LCCAP, de Guzman further noted, the LGUs could have access to the P1-billion People’s Survival Fund (PSF) that will finance local adaptation initiatives.

The PSF may be used to finance adaptation activities such as water resources and land management; risk insurance for farmers, agricultural workers and other stakeholders; infrastructure development and protection of natural ecosystems; and monitoring of vector-borne diseases triggered by climate change.

De Guzman said sectors mired in poverty such as farmers, fisherfolk and informal settlers living in danger areas have a higher chance of suffering ill effects of climate change since they often live, farm or hold assets in areas more exposed to drought and floods, which put their homes, crops, livestock and even their own lives at greater risk.

These sectors, he added, also have limited safety nets or insurance mechanisms to help them cope with climate change-related shocks like failed harvests linked to changing weather patterns and loss or damage linked to weather extremes.

“An LCCAP could well define the strategies of a community for strengthening local risk governance, enhancing rural livelihood, ensuring ecosystems integrity and building cultural resilience. Implementing these strategies surely reduces disaster risk and builds the adaptive capacity and resilience of communities to climate change impacts,” de Guzman explained.

He said they plan to empower the LGUs against climate change by rolling out in the coming months a network of learning centers that will offer standardized training modules on adaptation and mitigation measures.

De Guzman cited Section 14 of the Climate Change Act of 2009 or Republic Act 9729 that mandates LGUs as frontline agencies in the formulation, planning and implementation of climate change action plans in their respective areas, consistent with the provisions of the Local Government Code, the National Framework Strategy on Climate Change and the National Climate Change Action Plan.

source:  Manila Times

Tax court denies PLDT appeal on jurisdiction grounds

THE COURT of Tax Appeals (CTA) has rejected a petition by Philippine Long Distance Telephone Co., Inc. (PLDT), ruling that a Makati court has no jurisdiction over the company’s dispute with Tuguegarao City over P2.455 million in unpaid franchise taxes.

In a 15-page decision promulgated June 17, the CTA, sitting en banc, voted 5-3 to deny PLDT’s petition against the CTA Second Division, which originally declared improper jurisdiction on the part of Makati Regional Trial Court Branch 132.

The CTA cited a similar case in Bataan which declared the proper venue to hear a dispute within the province to be the Balanga City RTC.

It added that though PLDT headquarters is in Makati, the Makati RTC cannot “order respondents to cease and desist from assessing and collecting... business tax in addition to the franchise tax based on the same gross receipts.”

The CTA cited Section 21 of Batasang Pambansa (BP) 129 which states that “injunctive writs issued by an RTC are enforceable only within the judicial region where such court belongs,” emphasizing that the correct lower court to handle the case is the RTC of Tuguegarao.

The ruling was written by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Cielito N. Mindaro-Grulla and Caesar A. Casanova.

Dissenting were Associate Justices Lovell R. Bautista, Ma. Belen M. Ringpis-Liban and Presiding Justice Roman G. del Rosario.

In 2006, the company was compelled to pay franchise tax in Cebu City as ordered by the Supreme Court amounting to P432,468.75 after it failed to make payments from 1999-2003.

PLDT challenged Cebu City in 2004 on the imposition of franchise tax, claiming it is exempt.

Hastings Holdings, Inc. -- a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. -- has a stake in BusinessWorld through the Philippine Star Group, which it controls.

source:  Businessworld

Duterte inks first PPP deal of Davao

By Alberto C. Agra / Special to the BusinessMirror

Davao City—Before he steps down as city mayor, incoming President Rodrigo R. Duterte signed a landmark contract with the private sector on Tuesday worth about P39 billion.

On the sidelines of the end of the two-day business summit in Davao, the President-elect signed a public-private partnership (PPP) contract with a proponent on port development. This is one of his last acts as mayor of Davao City.

As local chief executive, Duterte—joined by representatives of the City Council and the members of the Davao City PPP Board (DCPPPB)—signed a 50-year joint-venture agreement (JVA) with Mega Harbour Port And Development Inc. This is the first PPP contract entered into by the Davao City under its 2015 amended PPP ordinance.

The Davao Coastline and Port Development Project aims to spur the economic growth of the city. Davao envisions to be the premier socioeconomic and tourism center in Mindanao, as well as in the East Asia-Pacific region. The project will support the city’s plan of becoming the gateway of commerce and trade in the Davao Gulf area, even for the whole of Mindanao region.

The project, which will be situated on a 214.61-hectare land to be reclaimed by Davao City as project owner and the proponent as project developer, shall accommodate a modern and state-of-the-art commercial port for containerized and noncontainerized shipments, with cargo-handling equipment and information-technology infrastructure. An industrial park, a commercial complex, and residential lots and houses will also be constructed thereon.

According to the project study submitted by the proponent, the unprecedented demand due to increased economic activity in the region requires better infrastructure and logistics support for its industries and services sectors, which the region’s main public seaport and secondary seaports cannot fully accommodate, especially bigger cargo-movement requirements.

Under the JVA, the reclamation and vertical development will be undertaken by the proponent at no cost to the city. The proponent shall also provide the relocation site for the affected residents at the commencement of the project. The informal settlers shall be tapped as source of skilled and unskilled laborers during the construction phase of the project.

The project, to be jointly undertaken by the city and the private sector, shall contribute to the government’s efforts to reduce the high underemployment rate by helping attract multinational business-process outsourcing companies and call-center operators to set up shop in Davao City through the provision of an industrial park.

Aside from these benefits, the city government is expected to increase its income, in anticipation of the new establishments and business enterprises to be catered in the industrial park and commercial areas. The city’s increased income will consequently translate into increased tax revenues for the city government. With more revenues, the city will be less dependent on the internal revenue allotment from national government and will have more funds for basic and social services.

This first PPP of the city truly advances the true north of PPPs —to promote the general welfare and provide for better quality of life of the people. The City Council and the multisectoral DCPPPB, in approving the terms of the JVA and recommending approval to the mayor, respectively, made sure this mandate and the pro-people and pro-change stance of the city will be respected and advanced.

After the signing of the JVA, the city government will forward the documents to the Philippine Reclamation Authority for its study and recommendation to the board of the National Economic and Development Authority for its approval.

Davao City joins 70 other local governments in pursuing PPPs using their own PPP ordinances. The provinces of Bataan and Nueva Ecija, and Calamba entered into JVs for their government center and capitol redevelopment, the province of Quezon on bulk water, hydropower and wind power, and the cities of Pasay, Parañaque and Manila, and Cordova Municipality on reclamation. Manila and Valenzuela cities entered into JVs for their markets, Iloilo City and Batangas City on terminals, and Cebu City and Cordova Municipality together for the third bridge in Cebu.

The message of the incoming President is clear. He believes in the importance and criticality of PPPs to plug infrastructure deficits. Dramatic change can be brought about through PPPs. He has demonstrated that local governments can be trusted and that they possess the competencies to pursue iconic and high-impact PPP projects. By signing the JVA, where the proponent was chosen through the unsolicited proposal route, he subscribes to this alternative route of selecting the proponent.

The future of PPPs in the country is bright. The nation is hopeful that under the Duterte administration, Filipinos will see a new international airport, waste-to-energy projects, more expressways, more water-related projects, monorail and subway systems, more socialized housing units, health-care facilities, more land development, more economic zones and more renewable-energy arrangements.

The signing of this JVA could not have come at a more auspicious time. It signals the “warm-up” to the realization of the 10-point socioeconomic agenda, the fourth agenda being to “accelerate annual infrastructure spending to account for 5 percent of GDP, with PPP playing a key role.” This showcases “Sulong Pilipinas: Hakbang Tungo sa Kaunlaran.” This is definitely a good first step not just for Davao, but also for the whole country.

LGUs granted extension to meet BuB requirements

THE BUDGET department has extended the period for local government units (LGUs) to comply with requirements set in order to tap funds allocated under the government’s bottom-up budgeting (BuB) program.

The agency through Joint Memorandum Circular No. 6-A allows the provisional release of BuB funds to towns and cities, provided that they meet the standards required of them by end-September this year. The original deadline was set on March 2015.

The circular was jointly signed by the heads of the Department of Budget and Management (DBM), the Department of Social Welfare and Development, the Department of the Interior and Local Government, and the National Anti-Poverty Commission, which covers fund allocations under the 2015 national budget.

LGUs must secure good governance conditions as certified by the national government before they can access additional funding through the BuB scheme, where local governments, civil society and community organizations identify and propose poverty reduction programs that may be funded by the national government.

LGUs can tap as much as P20 million for a poverty reduction project within their locale each year since it was launched in 2013 by outgoing Budget Secretary Florencio B. Abad.

However, incoming Budget chief Benjamin E. Diokno said in a television interview that the BuB was merely used as a “political tool” under the Aquino administration.

Should an LGU fail to achieve the requirements outlined under the BuB program by the end of the third quarter, the funds for the local projects will be released either to the provincial government where the area is located, or to a concerned participating agency for implementation, the circular read.

However, the province that will receive the funds must also meet the Good Financial Housekeeping standard required of any LGU, as well as a letter expressing their “willingness” to carry out the project for the concerned city or municipality.

The Budget department allocated P24.7 billion for BuB projects under the P3.002-trillion national budget this year, with plans to raise the allocation to P35 billion in 2017. -- M.L.T. Lopez

source:  Businessworld

PNoy men face raps for misused P800B

Outgoing officials of the Aquino administration may be charged with technical malversation over unreleased Internal Revenue Allotment (IRA) amounting to P800 billion for Local Government Units (LGUs), Batangas Gov. Hermilando “Dodo” Mandanas said.

Named as respondents in the case submitted for resolution were Budget Secretary Florencio Abad, Finance Secretary Cesar Purisima, Executive Secretary Paquito Ochoa Jr., the National Treasurer and chiefs of the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC). According to Mandanas, they were involved in approving the release of the IRA but allegedly withheld and misused part of it for national government programs, instead of automatically releasing the entire amount to the LGUs in accordance with the law.

“But all of them will say they’re just following orders, just like [in the case of] the DAP [Disbursement Acceleration Program]. The Executive Secretary [Ochoa] is included in the case because you cannot sue the President [Benigno Aquino 3rd]. He [Ochoa] has agreed with me that it has to be paid. He knew it because he was a former city administrator of Quezon City [Metro Manila],” Mandanas told The Manila Times after he spoke with town mayors during the League of Municipalities of the Philippines’ (LMP) executive committee meeting on Friday night at the New World Hotel in Makati City (also in Metro Manila).

“The money really belongs to the local government units and knowingly the national government used the money for their own projects, so using somebody else’s money is technical malversation. It’s really in bad faith,” the Batangas governor explained.

Mandanas, however, said the late Interior Secretary Jesse Robredo could not be held liable for diverting the IRA because the former Cabinet official had agreed that the funds should be given to the LGUs.

Before he was appointed as head of the Department of Interior and Local Government, Robredo had served as long-time mayor of Naga City, Camarines Sur.
He was the husband of Vice President-elect Leni Robredo.

“I did not include him [Robredo] in the case because this guy had good faith. He referred this to the DBM [Department of Budget and Management],” Mandanas said.

The governor filed a case with the Supreme Court on January 10, 2012 while the funds were still at P500 billion.

He said the case has already been submitted for resolution.

The High Court, meanwhile, ordered the automatic release of IRA as sought by Mandanas and former senator Aquilino “Nene” Pimentel Jr. in 2003 wherein a total of P60 billion in allotment backpay had been received by the LGUs.

Mandanas, former chairman of the House ways and means committee, said the Aquino administration should recognize in 2016 an increase of approximately P800 billion in IRA for local government units as IRA backpay from 2010 to 2016.

“That amount now which is unreleased in the portion of the just share, right now is already P800 billion, that much. If we want to translate it to what we are supposed to be getting, the national government has been withholding approximately 25 percent of the IRA that should go to us every year,” he told the town mayors.

Mandanas noted that the Internal Revenue Allotment should be released automatically and unconditionally as stated in the 1987 Philippine Constitution.

“As we all know, this is the lifeblood of the local government units. This is the one that really gives life. Without this, we do not have the local autonomy,’ he said.

“The share of the local government units should be 40 percent, according to the Local Government Code,” the Batangas governor added.

When he discovered that there is some P400 billion in unreleased IRA in 2010, Mandanas said he immediately presented this to the House committee and then he was referred by Robredo to Abad where the Budget secretary also agreed but he told him that they will use it instead because the Liberal Party was in power, and this was normally done by past administrations.

“I said to him [Abad] we’re from daang matuwid, we have to give this to the local government units because growth has to be inclusive which means that this has to reach the barangay [villages],” Mandanas said.

Daang matuwid or straight path is the good-governance mantra of the Aquino administration.

Mandanas, also a former member of the ruling Liberal Party, said he was ousted as chairman of the House ways and means committee because he was advocating the automatic release of the IRA and he did not also sign an impeachment complaint against then-Chief Justice Renato Corona.

He said he wants to save the Aquino administration from legal trouble.
If the outgoing President recognizes the law, Mandanas added, he should order the automatic release of the IRA.

“If he [Aquino] recognizes I, then there is good faith, and once there is good faith, then there is no malice. If there is no malice, there is no cause for action,” he said.

Mandanas pressed the Supreme Court to immediately release its decision compelling the outgoing administration to distribute the funding to the local government units before the term of President Aquino expires on June 30.

“We will encourage the SC to release its decision on this, do not be afraid,” he said.
LMP president Leonardo Javier expressed support for Mandanas in his fight to recover the money taken by the national government from the local government units.

“We’re all behind him [Mandanas] now that we realized how important this is for our all-inclusive growth,” Javier, Mayor of Javier town in Leyte province, said in an interview.

He will also encourage other mayors to support this advocacy, he said

“We are going to inform them and will let them join our crusade,” Javier said.

He noted that having a just share of the IRA for the local government units would not only boost autonomy but also inclusive growth in rural areas, especially the poor sectors of the country.

“We will push for this kind of fund because this will not only provide livelihood in the rural areas, it will also help decongest Metro Manila,” he said.

source:  Manila Times