Saturday, June 23, 2018
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We are under a tax

A few days ago in Davao City, groups believed to be NPA rebels burned down expensive construction equipment such as a backhoe and a payloader, costing several millions of pesos, owned by a local midsize construction company named Jameetrix—simultaneously, at that, in three different sites.

Question: Where were the military and the police while the city was under attack?

From what I gathered, the characteristic burning attacks by the rebels happened just about two kilometers from where the composite Task Force Davao, belonging to the Philippine Army 10th Infantry Division, was conducting a roadblock checkpoint. Hmmm. By the way, the simultaneous burning attacks by the rebels happened near the Davao International Airport. They were daring attacks, in short.


From what I learned, the sites were also somewhere between the headquarters of the AFP Eastern Mindanao Command, located in Camp Panacan, and the PNP regional office in Camp Catitipan. What I am saying is that those attacks must have embarrassed the Aquino (Part II) administration no end, must be driving down business confidence in those boom regions. The acting mayor of Davao City, the tough guy Rodrigo Duterte, already said that the rebel attacks indeed resulted in the decline of business confidence in the city.

They certainly remind the business sector of the times in the 1970s and the 1980s when the so-called rebel “death squads” freely roamed the city, killing policemen, soldiers, government officials and businessmen at will. Police Senior Superintendent Ronald dela Rosa, who is the chief of police in Davao City, reportedly labeled the attacks as the SOP of the rebel groups in their extortion racket—known in media as “revolutionary tax.”

From what I gathered, however, not only was the business sector subjected to such a tax by the leftist rebels, they were also charging some candidates in the May 2013 mid-term elections to pay for the so-called permit to campaign, or PTC. No wonder, among the indigenous communities in the Davao provinces, a cruel joke has been going around on why the communist insurgency would become a lingering problem. Why? Because the military has been refusing to surrender.

For all we know, the indigenous peoples in Mindanao are starting to believe that the rebels are actually winning against our military. Based on a peace and development outreach program devised by the government with the help of the Ateneo de Manila University, the military supposedly should be winning the hearts and minds of the people in Mindanao, who used to be the main supporters of the rebels.

Thus the failure of the military and the police to stop the rebel attacks remains a big mystery to the business sector in the area. After all, the attacks do not just affect the popularity ratings of our leaders. Actually, they are enormously costly to the business sector, particularly the small guys.

* * *

In this country, we generally welcome foreign investors with warmth and courtesy—the famous Filipino hospitality. Really now, we even treat well some abusive foreign investors. Well, they do bring into the country the money to generate jobs and contribute to the GDP growth rate. Granted—foreign investors may not care at all about the interest of the Filipino consumers and they are here to make a profit. The thing is, even foreign investors must follow the rules.

For instance, in the case of the Malaysian firm called Berjaya, whose local subsidiary is Philippine Gaming Management Corp., or PGMC, the foreign investor has openly attacked its client, which is none other than the PCSO, or the Philippine Charity Sweepstakes Office.


In the 1990s, during the time of former President Fidel V. Ramos, the PCSO awarded a big fat contract to PGMC, which was supposed to lease its lotto equipment to PCSO—not for a fixed amount, mind you, but based on the total take of the PCSO in the areas covered by the PGMC contract. There—PGMC gets a percentage of the PCSO lotto take. Ordinarily, in most leasing arrangements in the business sector, the lessee (i.e. PGMC) gets a fixed fee—not a percentage of the total gross sales of the lessor.

Anyway, the agreement between PGMC and PCSO was set to last until August 2015 and the PGMC claimed that it had the exclusive lease contract for all the lotto equipment of the PCSO in the entire Luzon. PGMC even waged a media campaign against PCSO, citing the court case that the publicly listed company filed against its very own customer, the PCSO, in effect questioning the “favoritism” of the PCSO towards another company called Pacific Online Systems Corp., or the POSC. You know—just jumble the acronym of PCSO and you get, well, POSC.

Now PGMC, anyway, is a Malaysian company, while the POSC is a Filipino company that had a contract with PCSO over the lotto operations in the Visayas and Mindanao up to July 2015. Notably, the PGMC offensive against the PCSO was well publicized as the Malaysian company questioned the extension of the POSC contract without public bidding. PGMC also questioned why PCSO allowed POSC to run lotto outlets in Luzon, which PGMC claimed to be its exclusive territory.

But the PCSO insisted that it did not give an exclusive franchise to anybody in the entire island of Luzon. From what I gathered, POSC volunteered to cut its lease rates from 10 percent to 7.5 percent, resulting in yearly savings for PCSO of roughly P20 million. The PCSO has been saying that, despite its many appeals to PGMC to cut its rates, PGMC would not budge, insisting on charging the PCSO 10 percent of the total retail receipts. The cut would have given the charitable institution PCSO yearly savings of more than P400 million.

Besides, PCSO chair Margarita Juico also must comply with the directives from the Senate and Commission on Audit (COA), urging the PCSO to bring down the “share” of the lotto equipment contractors, which was deemed to be too high. There—instead of helping the PCSO do its charity work, the Malaysian firm PGMC spent untold amounts for PR and advertising to hit PCSO. Its actions may serve to remind the public of the similar arrogance shown by the Malaysian military and government officials in the Sabah incident involving the followers of the Sultanate of Sulu.

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TAGS: ‘revolutionary tax’, Business, column, conrado r. banal iii, gaming industry, Military, PCSO, Philippine online systems corp., Police, rebels
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