Biz Buzz: Lobby here, lobby there
In a bid to sway President Aquino’s decision on the P35-billion Cavite-Laguna Expressway (Calax) project, the main protagonists in this long-running affair are running to their allies in the business community to buttress their positions.
Of course, we’re talking about the ongoing slugfest between the Ayala-Aboitiz consortium on one side and San Miguel Corp. on the other.
Last week, the Makati Business Club led a number of foreign business chambers in issuing a public statement hitting what President Aquino said was his inclination to have the project rebid.
The Makati Business Club, which is chaired by Ramon del Rosario Jr., who also happens to be a board member of Ayala Corp., said that having the Calax project rebid would adversely impact the credibility of the government among investors who want to participate in its infrastructure program.
Biz Buzz now hears that the Philippine Chamber of Commerce and Industry (PCCI) is set to issue today a statement supporting President Aquino’s decision to call for a rebidding.
The PCCI and the MBC have not always seen eye to eye on several national issues, of course. PCCI has historically taken a more supportive stance toward government and prides itself with having the largest national membership base (more than 20,000), even as most large corporations are on the MBC’s membership roster.
Incidentally, even as the PCCI issues a statement in support of President Aquino’s decision to have a Calax rebid, one of its sub-organizations (the Employers Confederation of the Philippines under Edgardo Lacson) has sided with MBC anti-rebid stance.
The question on everyone’s mind now is whether President Aquino will give in to the lobby of “big business” or to the lobby of the Alfredo Yao-led PCCI? We will know soon enough. Daxim L. Lucas
The real score in PAL?
In the aftermath of Lucio Tan buying back the now-profitable Philippine Airlines (PAL) back from San Miguel and Ramon S. Ang, several issues remain unclear.
The first and most glaring is: “What’s the plan?” The flag carrier finally made money under Ang’s leadership, after several years in the red. The aging Tan could also do with fewer of the headaches associated with running an airline in an increasingly competitive environment.
In recent statements to the press, Jaime Bautista, PAL’s returning president and chief operating officer, also expressed concern over the “excessive” number of planes the airline ordered under the San Miguel regime. In effect, based on Bautista’s statements, the Tan group just bought itself a billion-dollar problem.
Biz Buzz sources, however, tell a different story.
According to a high-ranking official privy to the ins and outs at PAL, Tan’s group doesn’t need the airline to be profitable to make money.
“PAL’s losses are simply written off. The moneymakers are the companies that support PAL, all of which Lucio Tan owns,” our source claimed.
He said this was how PAL was run before San Miguel’s entry. Most ancillary services (catering, airport operations, aircraft maintenance) were provided by companies either completely or partly owned by the Tan group. The money lost by PAL is more than made up for by profits of these units.
Try as he might, Ang was never able to sever these relationships with contractors due to the presence of Tan “generals,” whose jobs were secured as part of San Miguel’s initial buy in. What broke the camel’s back was Ang’s attempt to ease out these former Tan officials, which would have paved the way for new contracts.
“If Ang couldn’t get them to sell, he was never going to be able to run the business properly,” our source said. Paolo Montecillo
Not contemptuous
If financial and capital market groups are not rushing back to court to raise qualms on the second memorandum circular issued by Internal Revenue chief Kim Henares on the controversial “alphalist” ruling, it’s because they have yet to find the legal ground to do so.
Several capital market sources said law firm Romulo Mabanta Buenaventura Sayoc & Delos Angeles
—the firm representing the petitioners in this case and the one responsible for getting a temporary restraining order (TRO) from the Supreme Court —itself is of the opinion that the new BIR memo was “not contemptuous.” The firm has explained to its clients (the petitioners led by the Philippine Stock Exchange) that what was covered by the earlier obtained TRO was the involuntary disclosure of information by the entities. In the second circular, the disclosure of information is voluntary on the part of the taxpayer.
The much-ballyhooed “alphalist” ruling from the BIR requires the submission of an alphabetical list (hence “alphalist”) of payees of income payments subject to withholding taxes. Apart from being “prejudicial” to investors and infringing on the right to privacy, petitioners argued that this was in violation of the principle of uniformity of taxation and existing legal requirements, “impossible” to comply with and would “not serve any useful purpose.”
Romulo Mabanta, for its part, has advised PSE et al. that any affected person by the second circular, such as the issuer or the actual equity investor who is the taxpayer, may submit a letter to the BIR to clarify stuff, for instance, what will be considered satisfactory proof of status of the taxpayer. Another option is to file a petition for declaratory relief with the proper Regional Trial Court for a determination of his rights and/or duties.
Some market participants, however, do not agree that the second alphalist ruling was not contemptuous. Other legal opinions are under consideration while the BIR and other regulators have sought the reversal of the TRO on the first circular. Doris C. Dumlao
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