Poison in the Barrels

Author: Prof. Danny Piano

I am, of course, talking about the Priority Development Assistance Fund (PDAF), progeny of the Countrywide Development Fund (CDF), more popularly known as the pork barrel.

But why, as chamber of commerce, should we care?

Well, the pork barrel provides many opportunities for corruption. It is tempting. Not unlike the poisoned apple that Adam and Eve were tempted and got corrupted with. It is there, ready for the picking. And where corruption thrives, people suffer. Business suffers as well.

Remove the temptation. Remove the pork barrel allotted to congressmen and senators. They should not have any of it in the first place. They are the legislature. Congress should enact laws, not interpret nor execute them. These are realms of the judiciary and the executive, respectively. This is the basic doctrine of separation of powers.

In the past, legislators can recommend projects to executive agencies, which have discretion to approve or reject the recommendations. Ah, but somewhere along the line, perhaps by “sleight of hand,” the legislators were able to dictate the projects they want (within the DBM menu), and to choose the offices or organizations to fund and implement the projects. Isn’t this unconstitutional?

Still, many legislators fought to retain their pork barrel. For congressional initiatives, they say. One lawmaker cited the benefits from the pork funds saying it helps the needy: foots the bills of indigent patients, burial expenses of paupers, and pays for scholarships of poor students. Bollocks.

Still further, a presidential spokesperson said during a press conference that the PDAF is the “share” of the people in the annual national budget. That the pork funds are being used by lawmakers to address the needs of their people since the government cannot be everywhere at once. Nonsense.

Every nook and cranny of the Philippines has elected officials. As if the local government units are not capable of doing these if you allot to them the money instead. Well, there are also corruption problems in LGUs, but that’s another story.

Anyway, with the lawmakers wielding powers to control the purse, the temptation to steal becomes intolerably seductive to many. They ate the apple.

The recent JLN investigation uncovered colossal misuse of the pork funds directed to bogus organizations—P10 billion in all. That’s our money. The unconstitutional just became criminal.

The criminal part is already in the courts. I’m not a big fan of DOJ Secretary Leila de Lima, but on this issue, I became one. The lady has balls. I trust that she will do everything in her power to bring the criminals, whoever they may be, to justice.

On the unconstitutional part, you could hear roars of disagreement from the lawmakers who argue that the pork barrel is a necessity to them. Then, the Supreme Court declared just a week ago that it is indeed unconstitutional. It was a unanimous vote, too.

Said the SC:

“In view of the constitutional violations discussed in this Decision, the Court hereby declares as UNCONSTITUTIONAL: (a) the entire 2013 PDAF Article; (b) all legal provisions of past and present Congressional Pork Barrel Laws, such as the previous PDAF and CDF Articles and the various Congressional Insertions, which authorize/d legislators—whether individually or collectively organized into committees—to intervene, assume or participate in any of the various post-enactment stages of the budget execution, such as but not limited to the areas of project identification, modification and revision of project identification, fund release and/or fund realignment...”

And then silence.

Actually, you would have heard tears falling into the ground if you’re close enough. What a sad, sad day for many lawmakers. Hehe.

(SBFCC Newsletter Volume 18 Issue 10)

Stupidity of the Good Heart

Author: Prof. Danny Piano

You and a friend are leisurely walking along Magsaysay Drive (or Boardwalk if you prefer), on a nice early evening, taking on the sights, talking about the weather. Suddenly, a young beggar approached you asking for money—to buy food, she said. What would you do?

Knowing that she’s probably doing this all day, every day, would you shoo her away? Try to contact the Department of Social Welfare and Development (DSWD)? Or give her a few pesos?

By the same token, when environmental disasters affect people in squatter areas who shouldn’t be there in the first place, would you help?

These are but a couple of the many instances wherein people and organizations, during our daily lives, will act according to our own beliefs and values—positively or negatively, for or against. And this is not limited to us here; it’s the same the world over, even in a superpower like the United States.

In there, between Democrats and Republicans, the former is for, well, basically distribution of wealth from the rich to the poor thereby creating a welfare state. On the other hand, the Republicans’ attitude is towards fewer entitlements to the poor and advocating more self-reliance by creating more business.

Oh, that’s just rationalizing meanness said the Democrats; naïveté of a good but stupid heart, countered the Republicans.¹ Whatever it is, it’s consistent everywhere.

But as can be deduced, both sides of the coin have their own pros and cons. One is not much better than the other. What remains is knowing who you are and where you stand.

And so we segue to what the Subic Bay Freeport Chamber of Commerce is.

Obviously, we are a business organization first and foremost. This is the reason why we work with government agencies to try to create a better business atmosphere. This is also why we fight overreaching regulations—to ease the conduct of doing business. This is why we conduct mixers and networking nights—to try to encourage business partnerships between members. This is why we conduct trainings and seminars—to keep us up-to-date. But, as a chamber of commerce, these are givens.

What about our civic responsibilities?

Consider, in October alone, apart from member donations, the Subic Chamber donated quite a chunk of our income for the relief of poor people affected by the recent flooding. Just today, the Chamber Board decided that we should do more by creating a disaster rescue group and donate rescue equipment for its use. On October 17, we have conducted our Annual Blood Drive where the donations will eventually go to those who cannot afford blood when they need it. In a few weeks from now, we are going to donate toys to the less fortunate children during our annual Toys for Tots program. Such is the extent of our social programs.

But should we have allotted our money, time, and effort for all these to further boost business instead? Wouldn’t that mean eventually providing more jobs to the poor anyway?

We could, but that’s not who we are. True, we are a business organization and not a charitable institution. But we are a natural. We know that we will barely make a dent on our civic actions, but we will do it anyway...

It’s the stupidity of our good hearts. But I’ll take that as a compliment anytime.

¹ Krauthammer, Charles, The Central Axiom of Partisan Politics (Things That Matter), 2013.

(SBFCC Newsletter Volume 18 Issue 9)

The Case of the Olongapo Flooding

Author: Prof. Danny Piano

The City of Olongapo was again devastated by so much flooding... one of the worst in the city’s history. Many of the houses in low-lying areas were totally submerged, roof and all. Schools converted to evacuation centers were packed full of people, with little to eat and no fresh clothes to change to. It’s a disaster of huge proportions.

The local government and other agencies will spend humongous amounts of effort and money to try to save lives and will try to provide whatever comfort it can to those who were affected. Other government agencies like the Subic Bay Metropolitan Authority (SBMA) and non-government organizations (NGOs) will do the same. The city has, in fact, already declared the city as being in a state of calamity.

The Subic Chamber, as we have done many times in the past, again started to solicit relief goods from members. Many will respond with donations, and a good number will volunteer their time to help. We will do the best we can.

But...

Olongapo City is more than 15 meters above sea level on average. That’s relatively high. But why is it that so much flooding occurs almost every year?

Is it an unavoidable hand dealt by nature? Why is it that the Central Business District (CBD) of the Subic Bay Freeport does not have as much flooding? It is, in fact, at just about the same elevation as many areas in Olongapo City.

Oh, but we already know the answer. It’s the garbage clogging the city’s waterways... partly.

The main culprit is actually the heavily silted rivers. How much of a culprit?

From a basic satellite altitude mapping that I did earlier (see below), it is obvious that the silted mouths of the two rivers coming out of Olongapo City are about 11 meters higher than what it is at the shores just beyond the Boardwalk area of the Subic Freeport.

Of course, this means these rivers no longer have the capacity to carry heavy rains. For those who are not from this area, it started after the eruption of Mt Pinatubo when so much volcanic ash and sand were deposited to just about everywhere, which eventually ended on the rivers. But, that’s some 22 years ago!

Just dredge those rivers already.

(SBFCC Newsletter Volume 18 Issue 8)

Waste Dumping Follow-up

It was more than nine months ago, October 2012 to be exact, when the waste dumping issue hit the newspaper headlines. It even prompted a senate investigation.

In February 2013, the Senate concluded its investigations resulting in a Committee Report which made recommendations to concerned government agencies.

Interested to know what has happened in the past five months since the Senate Report? Absolutely nothing!

This prompted the SBFCC to write Senator Loren Legarda to make a follow up. Below are extracts from the letter:

Dear Senator Legarda:

...We write your good office in relation to the Subic Bay Waste Dumping issue which your committee investigated half a year ago. We are happy to say that the SBFCC has now put in place an Automatic Identification System (AIS) antenna in Subic Bay which can identify, locate, and track vessels within Subic Bay and abutting areas up to 100 kilometers out. We have also requested SBMA to require transponders on smaller commercial vessels so that they can be tracked as well. Had this system and procedure been in place during the dumping issue, we would have known exactly the specific tracks the vessel had and where it went to dump the waste. Now we can.

We also write to comment on our impression on developments five (5) months since the issuance of your committee’s report. Sadly, we feel that your committee’s recommendations, particularly to other government agencies, seemed to be largely ignored. We write, therefore, on what seemed to be lack of action of some government agencies to heed and implement the recommendations embodied in the Committee Report No. 738 dated February 5, 2013 submitted by the Committees on Foreign Relations and Environment and Natural Resources. It may be recalled that a Committee Report was issued following comprehensive hearings and investigation in aid of legislation on the reported toxic and hazardous waste dumping at Subic Bay by Glenn Marine Asia Philippines, Inc, a foreign contractor of the US Navy.

The committees strongly recommended to SBMA, PCG, DENR, and MARINA the following measures, among others:

“1) For the SBMA, PCG, and DENR to initiate administrative proceedings against Glenn Defense for its failure to comply with the country’s environmental and marine protection laws and regulations and to impose necessary penalties as warranted;

2) For the SBMA, PCG, DENR to suspend all permits issued to Glenn Defense until such time that the administrative proceedings shall have been completed and appropriate sanctions shall have been meted out;

3) For the DENR, in coordination with the PCG and DOJ, to conduct further investigation to determine if the filing of criminal / civil cases against Glenn Defense, and its blacklisting, is warranted. The findings in this report shall be used as an input to the investigation...

6) For MARINA to review its decision to exempt Glenn Defense from the government’s permitting requirements covering the temporary use of foreign ships in Philippine territory on what is now established as a misplaced assumption on the part of Glenn Defense that it is covered and entitled to the privileges accorded under the VFA...

9) For MARINA to review the extent of permitting violations by Glenn Defense prior to the adoption of MARINA Memorandum Circular 2011-04 and to impose the necessary penalties for such violations;”

However, despite the clear and meaningful recommendations submitted by your committees, except for SBMA which already suspended [Nov 2012] the hauling of wastes by barge of Glenn Defense pending further investigations, the other aforementioned agencies seemed not too eager, for reasons not known to us, to initiate their own proceedings. Had they done so, at least Item 2 above would have been enforced already. As it happens, Glenn Defense is still operating in many areas around the country.

[PD 601 and RA 9993] have placed upon the shoulders of PCG the enforcement of laws and promulgate and administer rules and regulations for the protection of marine environment and resources from offshore sources of pollution within the maritime jurisdiction of the Philippines.

The illegal dumping made by Glenn Defense is a serious offense and should not be disregarded. It has been eight months since the issue of the waste dumping by Glenn Defense began and five months since the issuance of the Senate Committee Report and Recommendation, yet we have not heard of any sanctions against Glenn Defense and we have not heard of any suspension or revocation of their permits, much less any investigation being conducted against them by the PCG.

The SBFCC is concerned that the lack of action from government agencies might be perceived by other companies in the same business of hauling waste as an inference that they can get away with similar violations, which could ultimately make the Philippines a dumping ground of waste.

In light of the foregoing, we appeal to you and the committees you represent as part of your oversight powers, in seeing to it that laws are faithfully enforced and to put government agencies to task in carrying out their mandates. We hope that all the necessary parties are held accountable for their failure to enforce the laws under their jurisdiction and that all those who are guilty of violating our environment and destroying our marine life are penalized and made to follow the laws of the land.

We trust that you will not let violators of our environment and maritime laws get away with their illegal acts and make a mockery of a senate’s committee report which the SBFCC finds just and reasonable in the first place.

SBFCC Board of Directors

(SBFCC Newsletter Volume 18 Issue 7)

BOC responds to SBFCC’s complaint regarding E2M

A few weeks ago, the Subic Chamber wrote the Bureau of Customs seeking assistance to alleviate the distress of a number of its members due to the E2M Cargo Movement System of the BOC computer system allegedly being down. This caused additional storage fees.

The Chamber understands the quandary that a lot of Subic Bay locators experience whenever a system has its downtime or merely not working efficiently. It would mean delays resulting in revenue losses.

The Subic Chamber, consequently, requested clarification from the BOC and to provide possible solutions.

We’re not holding our breath. It is not uncommon for government agencies to simply ignore letters sent their way, especially complaints. That’s even if Section 3, Rule VI of the implementing rules of Republic Act No. 6713, the Code of Conduct and Ethical Standards for Public Officials and Employees, requires that written requests, motions and petitions, and the like must be acted upon within 15 days from receipt.

But... the BOC responded promptly. Here:

PROF. DANNY PIANO
President
Subic Bay Freeport Chamber of Commerce
Rm. 101 SBMA Regulatory Building cor.
Labitan St. & Rizal Highway
Subic Bay Freeport Zone

Dear Prof. Piano,

This is in reference to your letter addressed to Atty. Adelina Molina, District Collector, Port of Subic dated 22 May 2013, requesting for clarification on the recent downtime of the E2M system of the Bureau of Customs.

We understand your concems and rest assured that we are doing our best to address the problems brought about by these recent E2M downtimes and to prevent a recurrence of the same.

Please allow us to explain the reason why the E2M problem occurred on May 9 to 10, 2013.

The problem was rooted on backlog transaction which overloaded the server. The downtime experienced on May 9, 2013 and the unstable operation on May 10, 2013, followed by a 3-day weekend caused a data backlog of more than eight (8) thousand transactions. This overloaded the servers and resulted in slowdown and server restarts.

To remedy the problem, MISTG implemented the following:

• Closer monitoring of the E2M server;
• User processing/activity rnonitoring;
• VASP and PCHC coordination;
• Clearing of tables;
• Extended working hours for MISTG (On-call).

For the long-term solution, the following projects are lined-up to provide a lasting solution to the problem:

• Network Upgrade and outsourcing - Awarded to PLOT;
• IT Infrastructure and Maintenance project - Awarded to the JV of Webfontaine and Omniprime;
• IPCS -Integrated Philippines Customs system (upgrade of E2M);
• NSW2 - National Single Window phase 2.

Thank you.

Sincerely,
JONATHAN T. SORIANO
Officer-In-Charge, MISTG

cc: Commissioner Rozzano Rufino B. Biazon
Deputy Commissioner Ma. Caridad P. Manarang, MISTG
Atty. Adelina Molina, District Collector, Port of Subic

The Subic Chamber, to be quite frank about it, was pleasantly surprised by the timely reply from the Bureau of Customs. We were expecting, at most, just an acknowledgment of the letter’s receipt. We were wrong.

What we received was the BOC not only owning up and explaining the problem; it also provided practical solutions—both short-term and long-term.

Last March, the BOC acquiesced to attending our Import/Export Forum. This time, their reply to our letter seemed to be sincere and spot on with its solutions. I myself am not easily impressed, but with this second one on top of the first, I am.

This got me thinking about the much talked-about planned abolition of the Bureau of Customs a couple of months back. You know, where the Aquino administration considered that smuggling can only be totally stamped out by total abolition of the BOC and by replacing it with “a professional institution run by private officials and employees.”

I am a staunch supporter of that move, even if there are known legal impediments and even if an act of Congress may be needed. But hey, I think I’m having a change of heart; not that it matters any. But perhaps a total abolition is an overkill?

Conceivably, a combination of top-down cleansing of known corrupt personnel, promotion of the good ones, and a full automation that will do away with face-to-face transactions between Customs employees and importers/exporters may be enough.

There could be hope after all—and it may not be via abolition.

(SBFCC Newsletter Volume 18 Issue 6)

Labor-Only Contracting

By Philippine law, there are permissible job contracting and subcontracting. But labor-only contracting? My friendly advice is to stay away from it. It is illegal!

What is it?

The Philippine Labor Code, since 1974, had already illegalized the notorious practice of labor-only contracting by some middlemen (now mostly masking as valid companies) who make quick money at the expense of the blood, sweat, and tears of workers. The practice has long been proven illegal in many court decisions, where both the contractors and the employers were heavily penalized.

But what’s the difference between permissible job contracting and labor-only contracting?

In a Supreme Court decision just last year [G.R. No. 172349; 13 June 2012], it was stated that,

“Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur:

(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof;

(b) The contractor or subcontractor has substantial capital or investment; and

(c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.

In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

(a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; and

(b) The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal.”

The test of independent contractorship is “whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work.” A mere declaration of independent contractorship in a contract does not necessarily make it so.

If that’s not clear enough, I don’t know what is.

Anti-business, some would counter. I beg to disagree. An employer-employee relationship is akin to a social compact. Both parties, employers and employees, must therefore contribute to the compact and must both have their sacrifices. The protection of workers does not necessarily mean the oppression of capital.

So, if you think you may be unknowingly violating the law, you’d better step back, regroup, and do it right... now, before it is too late.

Not worried?

In the case of Procter & Gamble [GR 160506, 2010], the Supreme Court awarded moral damages and full back wages to hundreds of workers amounting to almost P300 Million. Need I say more?

(SBFCC Newsletter Volume 18 Issue 5)

Import/Export Informative Forum

Here's my Welcome Remarks during the Import/Export Informative Meeting held at the Subic Bay Exhibition and Convention Center (SBECC) last May 14, 2013.

---

Good afternoon!

Bureau of Customs Deputy Commissioner Prudencio Reyes Jr, Subic District Collector Atty. Adelina Molina, E-Konek representative Fernando Ancheta, distinguished guests, locators, teachers and students, ladies and gentlemen.

Welcome to the first ever Import/Export forum between the Bureau of Customs and Subic Freeport stakeholders. Thank you to the Bureau of Customs, E-Konek, SBMA, and other related organizations for granting us their presence in this special meeting.

As the forum title says, this is an Import/Export Informative Meeting. We are not here to bang heads against each other; we are not here to point fingers; we are not here to vent out—or at least we will try not to. We are here so that all sides, the Bureau of Customs, SBMA, service providers, and locators, can understand each other better. I am, thus, quite surprised that some of the original speakers that we invited to this forum are quite petrified to join the Q&A forum. Many of them backed out.

But see, the main problem is that tariffs and customs regulations are not easy to understand. That is the reason why we even have college courses specific to this area of knowledge. If it’s tough for business people to understand a lot of it, what more for ordinary citizens? With globalization, it is not uncommon anymore for individuals to purchase goods from other countries, and very conveniently so, through ecommerce websites. It’s even fun—until the package hits the Bureau of Customs. Then trouble begins.

Not a lot of people understand that taxes have to be applied to goods purchased from other countries. Just look at the Bureau of Customs Complaints page on Facebook? Yes, they do have it, with the intention of helping people out. Unfortunately, the majority of complaints are about matters emanating from the simple fact that they are not aware of Customs regulations.

We can argue that many of the information are not available to individuals. I beg to disagree. Again, it’s on Facebook; you just have to go to the Philippine Customs Duties and Taxes page, and it will show you how to calculate Customs taxes for a number of items. How to compute customs taxes for imported items like apparels, vehicles, how to compute for excise taxes, and more. The information is there. And with today’s digital world, you don’t even have to get up your seat to learn how things work.

So what is the problem?

The crux of the matter is that all those information is overwhelming. It is overwhelming for many companies, and certainly overwhelming for individuals. So overwhelming that a lot of companies that do large scale importing and exporting hire brokers to take care of their transactions. Unfortunately, just like other regulations and procedures that are inherently complicated, fixers abound.

And we do not have to be coy about it, some “fixers” are from inside the Bureau of Customs even. These people give the Bureau a bad rap. Like many other government organizations, you have both good and bad apples. President Aquino himself wants the bad apples rooted out.

But we have to admit also that this problem is not isolated to the Bureau of Customs. A good number of businesses are also dishonest. Okay, let’s call a spade a spade and call some of them smugglers. Good apples, bad apples.

The good thing is that Commissioner Ruffy Biazon, as represented here by Deputy Commissioner Reyes, and the good apples in Customs are starting to make a difference. We will help them out. We will even do it from within our ranks, as we have recently done albeit on a somewhat different issue [waste dumping].

One way to do it is to understand better some of the more complicated procedures of the Bureau of Customs; to question why some things seemed unreasonable; and for the Bureau of Customs to patiently explain why some things need to be done a certain way. This is what this forum is all about.

The Subic Bay Freeport Chamber of Commerce is hopeful that this meeting can be a starting point for more dialogue, more transparency, and not only better, but right way, of doing business. That is what the essence of President Aquino’s speech during the 110th Anniversary of the Bureau of Customs last year. The Subic Chamber is one with him; we are one with Commissioner Biazon, Deputy Commissioner Reyes, and the good apples of the Bureau of Customs. We will run after the bad apples within our ranks, too. The reforms in the Bureau of Customs is starting to bend the crooked road into a straight path—into daang matuwid.

We will help make that happen.

Thank you!

(SBFCC Newsletter Volume 18 Issue 4)