Biz Buzz: A taxing bonus
A controversy arose over the recent pronouncement of Internal Revenue chief Kim Henares that Christmas bonuses would be subject to withholding tax.
The public’s reaction, naturally, was negative, ranging from dismay to outright anger. Christmas bonuses, after all, are a sacred source of income for the Filipino workforce, which counts on the windfall for their Christmas shopping, from presents to Noche Buena meals.
To some observers, it seemed that the issue popped up out of nowhere. Well, almost, but not quite.
Biz Buzz learned that the issue on taxable Christmas bonus—this season’s edition, that is—actually had its roots over at ABS-CBN Broadcasting Corp. According to our sources, the company distributed to its employees their legally mandated 13th-month pay last October but, for some unexplained reason, gave them out intact without the legally mandated 32-percent withholding tax for bonuses above P30,000 (a provision that has been a law for the better part of 15 years now).
“They might have forgotten to withhold the tax,” said our source. Or maybe the network decided to pay out the bonuses early and slide in the taxes later. Whatever the reason, some ABS-CBN employees were scratching their heads at the increase in their withholding taxes when they saw their pay slips for November. The tax burden is being spread out over the next few paydays to ease the impact on the staff, we hear.
In the meantime, the BIR was put on the spot and made to explain the tax policy like it wasn’t in place since 1997.
So yes, just like death, taxes really are inevitable. But they can be deferred by a month or so, sometimes.—Daxim L. Lucas
Calata in court
We got word that the Securities and Exchange Commission recently filed with the Department of Justice a criminal complaint against a group of people—the first of many, sources said—involved in stock price manipulation of agriculture products distributor Calata Corp.
And the reason why they are described to be the “first” batch is because the suspected “masterminds” have yet to be pinned down, according to sources familiar with the complaint.
The respondents include about seven or eight people who allegedly conducted questionable trades on Calata, helping push up share prices shortly after the company’s public debut. But these people are believed to be only dummies—some of whom are now either missing or in hiding—who knew nothing about the stock market. None of the respondents was a broker (four brokerage firms involved in the questionable trade were already penalized by Capital Markets Integrity Corp.), while at least one is an employee of Calata.
Overall, there are at least 10 people named in the complaint-affidavit, plus some John and Jane Does.
Our sources say this initial roster seems to include only the pawns. But, like in a game of chess, prosecutors have to start somewhere to get to the king. Those not on the initial list are not necessarily scot-free.—Daxim L. Lucas
Top broker
CLSA Asia-Pacific Markets is again the number one stockbrokerage firm in the Philippines for research, sales and execution, according to Asiamoney’s 23rd annual Brokers Poll 2012, where more than 5,900 respondents from about 2,300 institutions were surveyed.
Investors voted CLSA Philippines the best in Overall Country Research for the third consecutive year, while CLSA head of Philippines research Alfred Dy reclaimed the title of “best analyst” in the country.
CLSA Philippines was also lauded for its research coverage in eight of 10 key industry sectors surveyed in the Philippines by financial magazine Asiamoney: banks; food, beverage and tobacco; real estate; small caps; strategy; telecommunications services; and transportation and utilities.
CLSA’s head of Philippines sales Alex Dauz likewise kept his bragging rights as “best salesperson” in the country. The CLSA sales team was also named “best” in overall sales services for the fifth consecutive year.
“CLSA Philippines takes a great deal of pride in its strong reputation for offering the most independent and uncompromised research, as well as unparalleled sales and execution service to its clients. I am delighted our efforts have been acknowledged and look forward to continuing this momentum into 2013,” CLSA Philippines country head Mitzi de Dios said.—Doris C. Dumlao
Speaking of stock brokers…
Some of the top brass at the SM group of companies, especially those at SM Investments Corp., are upset that they’re not getting enough research coverage from the big guns of the local investment banking and brokerage industry.
According to our source, SMIC officials were sore at the brokerage house unit of German financial giant Deutsche Bank for not keeping tabs of the recent positive developments at the flagship holding firm of the Sy family.
The research unit of Deutsche, we’re told, last issued a research note about SMIC in February 2012 (giving a “buy” recommendation, of course). For non-stock market practitioners, research coverage by analysts are highly coveted by publicly listed firms since favorable recommendations can lead to heavy buying by foreign fund managers (which, in turn, push up share prices and raise the net worth of the companies’ owners).
Ten months later, Deutsche still has to update its research report, even if SMIC’s share price has already exceeded the broker’s target price.
So yes, the people at SMIC are sore at Deutsche since they feel they’re not getting the same love that other conglomerates get. For how long the rift will last remains unclear. It also remains to be seen whether this “tampuhan” would affect Deutsche’s chances of bagging capital market deals from SM, whose people are known to have long memories.—Daxim L. Lucas
‘Bailout’ blocked, courtesy of The Firm
They’re not exactly the favorite lawyers of the Palace incumbent nowadays (despite the help they provided during the Corona impeachment trial), but that doesn’t mean the Villaraza Cruz Marcelo and Angangco law office, a.k.a. “CVC Law,” is out of action.
In fact, “The Firm” (as they are known by friends and foes alike) has been busy with more traditional legal pursuits, and scoring some important victories along the way.
Last week, The Firm—by virtue of being the hired gunslingers of the Bangko Sentral ng Pilipinas—pulled off a major coup when it convinced the Court of Appeals to overturn an earlier decision that ordered the reopening of the shuttered Banco Filipino.
But the star of the show was Appellate Justice Noel Tijam, who probably saved the government billions of pesos in public funds. As he noted in his decision, it was clear that any amount given to Banco Filipino would be dissipated rather rapidly.
Banco Filipino, of course, has been dunning the BSP to the tune of P18 billion for its closure in the 1980s. The Firm believes that Justice Tijam actually saved the Republic more than just that. Based on generous estimates, the cost of a bank bailout for the government would have been a P25-billion financial package, plus a special liquidity fund of about P16 billion. In total, Filipino taxpayers saved about P41 billion. Whew.
The Firm’s lawyers who successfully worked on the case included former Ombudsman Sonny Marcelo, Gus San Pedro and John Balisnomo. High five, gentlemen.—Daxim L. Lucas
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