BSP's prevarications

DIE HARD III

Herman Tiu Laurel

7/11/2011

The Bangko Sentral ng Pilipinas (BSP), through one of its officers, issued a letter-to-the-editor last July 6 in response to my “RP wasting $30-billion fund” column of July 1.  That article triggered one of the highest positive feedbacks ever to my e-mail inbox.  Indeed, the response was unanimous: Readers agreed with our position that at least half (or $30 billion) of our international reserves should be freed up and put to good use since not only I but several others, like former National Economic Development Authority (Neda) chief Romulo Neri, believe it to be not just necessary but even legal under IMF rules.  In fact, another supporter of this position with whom we had lengthy consultations on this some years ago is former National Treasurer Norma Lasala.

 

Last Saturday, I went to a Tomas Morato restaurant to attend a briefing with Butch Junia, former Mayor Jun Simon, and law professor Alan Paguia on the latest Energy Regulatory Commission (ERC) dismissal of Commission on Audit (CoA) findings pointing to Meralco (Manila Electric Co.) overcharging in 2004 and 2007 that amount to some P7 billion.  It was there that a Kapihan was also being held, diverting my colleagues into becoming its panelists as well.

 

Among the featured guests was the same BSP official who responded to our column.  He was the first to speak.  After heaping effusive praise for ratings agencies, such as Fitch and Moody’s, in upgrading the Philippines to just below investment grade, which he said is something to crow about, he ended his long-winded self-congratulatory statements with a very aggressive pitch for more taxes, insisting that the Philippines is being left behind by Singapore , Thailand , and Malaysia because of our (ehem!) low taxes.

 

Let’s put these ratings agencies in the proper perspective.  Consider this RJR online business report: “…a US Senate committee examining the reasons behind the crisis… concluded that Moody’s and Standard and Poor’s, the world’s two most prominent ratings agencies… (triggered) the global financial crisis in 2008… (by continuing) to give top ratings to mortgage-backed securities months after the housing market started to collapse…”  It added, “neither company had a financial incentive to assign tougher credit ratings to the very securities that for a short while increased their revenues, boosted their stock prices, and expanded their executive compensation.”

 

From The Huffington Post’s “SEC Threatens Credit Rating Agencies with Fraud Charges” story, we have another confirmation that official moves have begun “against Moody’s Investors Services over its ratings of risky investments that led to the financial crisis.”

 

More recently from Peninsula News, we learn of “European politicians (accusing) credit rating agencies… of anti-European bias after Moody’s downgrade of Portugal ’s debt… (with EU Commission President José Manuel Barroso saying) ‘It seems strange that there is not a single rating agency coming from Europe .  It shows there may be some bias in the markets…’ (joined by) German Finance Minister Wolfgang Schäuble (calling) for limits to be placed on the rating agencies’ ‘oligopoly’.”

 

China also views these western ratings firms with deep trepidation, which is why it set up its own ratings agency, Dagong.  From China.org.cn (July 9, 2011): “ China ’s own sovereign credit rating report… (comes) at a time when many complain (that) Moody’s, Standard and Poor’s and Fitch were partly to blame for the recent global financial crisis.”  It further quoted Dagong chairman Guan Jianzhong as saying “that the current Western-led rating system ‘provides incorrect credit-rating information’.”

 

Back here, the problem with these so-called “upgrades” which the BSP official attending the Kapihan so enthused over is that the sources--the ratings agencies themselves--formulate their assertions on the basis of their own agenda which often is, as in the case of the Philippines , one that is contrary to the interest of the people.  This is a fundamental point.

 

The BSP, in following these ratings agencies’ agenda by trumpeting their claims, is merely taking Filipinos for a ride.  The real agenda of the ratings agencies and the financial mafia they serve is to make the Philippines take on more debt, which is being made much easier by the ratings upgrade.  This is despite the fact that the Philippines actually now has the internal resources (and lots of it) to pay off such debt and/or fund its own development--something that BSP officials such as Diwa Guinigundo are not saying.

 

Coming from Guinigundo himself, our 2011 international reserves of $69 billion already cover 12 months of imports even while the IMF requires only three months, and as Philippine foreign debt stands at P60 billion.  Guinigundo justifies the costly (interest, opportunity costs, dollar depreciation) idling of 75 percent, or $45 billion, of RP’ reserves as a safety measure against finicky financial markets.  Is this sane while the country continues to take on new debt?  Philippine debt rose by $788 million in 2010 and debt stock grew by more than 9.2 percent, or $5 billion, by end of 2010.

 

Meanwhile, despite Guinigundo’s claim in his letter that “…the BSP does not own (the Special Deposit Account or SDA) and therefore, it is hardly a ‘disposable’ fund kept idle,” others, such as Marvin Fausto, president of the Trust Officers Association of the Philippines contend otherwise.  Fausto, in fact, said on Nov. 3, 2010, “(the money parked in SDA facilities) should instead be channeled to funding needs, like in infrastructure projects.  We need investments.  (The money in SDAs) is enough to spur (further) growth.”

 

Victor Abola, senior economist at the University of Asia and the Pacific, whom I seldom agree with but do in this case, has also said that SDAs are a “waste of resources” and the “BSP should lower interest rates for SDAs to free up more funds, from the present 4 percent to 3 percent.”  I was prevented from cross-examining Guinigundo at that Kapihan only because the host probably feared that I would put his guest on the spot.  Well, now he is.

 

(Tune in to Radyo OpinYon, Monday to Friday, 5 to 6 p.m., and Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; Talk News TV with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on GNN, Destiny Cable Channel 8, on “Head-to-Head vs Coconut Oligarchs”; visit http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com for our articles plus TV and radio archives)

Weakening the workers' bargaining leverage

BACKBENCHER
Rod Kapunan
7/9-10/2011



It may surprise many, but the adoption of minimum wage greatly weakened the workers' bargaining leverage to obtain a reasonable market value for their labor. It is surprising, but that's the way it is. Instead of having the incentive to unite to demand for an equitable amount of wage, the imposition of minimum or regulated wage automatically deprived them the inertia to form or join labor unions.

It pre-empted labor unions of their sacred role to demand for higher wages. In fact, as far as unions are concerned there is no amount of wage that is satisfactory to the workers. Be it given by the State or obtained through collective bargaining negotiations, the amount would always be short of what is called living wage. For them to say otherwise is to deprive themselves of the logical reason for their avowed existence.

The other side of it is it automatically relieves the employers the tension that builds up between them and their employees.

So, for all of the unions' harsh criticisms that the current amount of wage is insufficient, it created a situation where it is the State that now bargains for them. The new minimum wage may not be that much, but is enough to weaken the will to demand.

Although numerous surveys on wages have been conducted, not one has ever come out to determine why a number of workers already employed would not want to join the union. Surely, the survey would shock many, but as of April 2009, the country has a total of 34,320 registered labor unions representing a total membership of 2.6 million. Yet, for the same year, the Department of Labor and Employment stated that the country had a total labor force of 36.8 million. As of 2011 that figure has increased to 38.9 million. Hence, if we are to base our figure on the 2009 data then only 7.06 percent represent the unionized workers in this country.

That dismal figure now exposes the truth how trade unionism has lost much of its appeal, and their failure is precisely because workers already receiving the minimum wage are fairly satisfied, and would not want to lose their job by joining unions that have been losing much of their potency. Even if we assume further that of the present 38.9 million Filipino workers only about 30 percent are receiving the minimum wage, which is about 12.9 million, still that would not suffice to explain why only about 2.6 million are registered as union members.

Ramifying further, if we could safely assume that 2.6 million are registered union members, maybe more that 50 percent of them would not risk go on strike just to demand a wage increase knowing that more than 70 percent of the strikes in this country end up with the strikers losing their job. In effect, the 1.3 million union members are not likely to go on strike just to demand for an across-the-board increase and for more benefits beyond that given by the Labor Code.

Their noticeable passivity to engage in a collective and concerted action now sustains our assertion that the country's blue collar workers are rather overpaid. To clarify ourselves, if those receiving P426 a day are not satisfied, then most likely they would join the union, and even risk joining a strike just to achieve their demands. Rather, many of the strikes we see today are considered defensive strikes, like illegal termination, retrenchment, union busting or violation of the existing CBA. If so, then the 1.3 million is likely to dwindle further to below one million to 500,000 workers mostly militant trade union members.

For the estimated 70 percent or 26 million workers receiving below the minimum wage, surely they have a more urgent reason in joining a union. However, that is not the case. Employers paying 25 percent less of the current minimum wage would insist the amount stand as the real market value of labor, while to most workers that amount is fairly better than nothing, much better than farming! But what makes it unfair is that the system of minimum wage made payment below that amount illegal.

Invariably, even if they would go on strike to demand compliance, they cannot because companies violating the wage law are 100 percent non-unionized, they being casuals or supplied by labor-only contractors. Effectively, the 92.94 percent of the workers in non-unionized companies are deprived of their right to strike because of the prerequisite that unions has to be registered with the Department of Labor, and must stand as the recognized collective bargaining agent of the workers in a given establishment. Wildcat strike is no longer legal in our present jurisprudence.

This now answers the question: Why rock the boat that would result in them losing their employment or kill the goose the lays the golden egg if such would result in the closure or relocation of the company? The minimum wage of P426 daily or equivalent to $9.79 is not much, but taking into account our unemployment rate of 7.3 percent and an underemployed of about 19.7 percent as of 2010, that factor now puts a decisive edge to the continued relevance of trade unionism.

Compounded by the high cost of minimum wage that does not tally with our per capita income of $3,890,188 as of 2011, employers' worst fear could happen once their employees become permanent and later form their own union. Their cost per employee could dramatically soar three times their current cost, and it was this fear that opened the Pandora's Box to labor-only contracting. For agency-supplied employers to pay an extra cost would still be a cheaper option than if there is a union demanding every now and then a wage adjustment and threatening to go on strike once their demand is not met.

It is this fact why many of our employed blue collar workers now rely on the government to bargain for them believing it would not allow a situation where their income could dip to starvation level. Since the increase is of general application, it thus resulted in the losing of their steam to bargain collectively.

• rodkap@yahoo.com.ph

Is Tuesday "at least three days before" Friday?

Alan F. Paguia
Former Professor of Law
Ateneo Law School
University of Batangas
Pamantasan ng Lungsod ng Maynila
alanpaguia@yahoo.com
July 7, 2011



Is Tuesday at least three (3) days before Friday?

It is respectfully submitted the answer is NO.

1. When the law sets a period of time within which a party or counsel may file a pleading or motion, such period of time must be observed. Otherwise, the right to file the pleading or motion is lost.

2. When the law says a party has fifteen (15) days to file his answer to a complaint, he must do so within the period. Otherwise, the right is generally lost.

3. Under the law, a losing party has fifteen (15) days from receipt of a copy of the decision within which to appeal or file an appropriate motion for reconsideration or new trial. Otherwise, the decision becomes final and executory and no longer appealable.

4. To illustrate: Where a copy of the decision is received by a losing party’s counsel, say, on June 30, 2011, he has fifteen (15) days therefrom, or July 1-15, within which to appeal or file a motion for reconsideration or new trial. If he fails to do that, the reglementary period will not be interrupted and the decision, by operation of law, shall become final and executory at the close of office hours on July 15, 2011. In such event, the right to appeal is LOST.

5. What is the three (3)-day motion rule? It states:

“Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice.” (2nd par., Sec. 4, Rule 15)

Since motions are ordinarily heard on Friday afternoons, the question is: On what day – Monday or Tuesday – must a copy of the motion be received by the other party for the purpose of complying with the three-day motion rule?

6. The resolution of this issue is important because non-compliance with the rule renders the motion a mere scrap of paper which the court may not act upon, and which does not suspend the period to answer a complaint or to appeal (Sembrano v. Ramirez, 166 SCRA 30).

7. According to the Supreme Court, the answer to the question is Tuesday.

In Preysler v. Manila Southcoast Development Corporation, G.R. No. 171872, June 28, 2010, the Court ruled:

“…the petitioner’s Omnibus Motion was set for hearing on 12 November 2004. Thus, to comply with the notice requirement, respondent should have received the notice of the hearing at least three days before 12 November 2004, which is 9 November 2004. Clearly respondent’s receipt on 9 November 2004 (Tuesday) of the notice of hearing of the Omnibus Motion which was set to be heard on 12 November 2004 (Friday), was within the required minimum three-days’ notice. As explained by Retired Justice Jose Y. Feria in his book, Civil Procedure Annotated, when the notice of hearing should be given:

The ordinary motion day is Friday. Hence the notice should be served on Tuesday at the latest, in order that the requirement of the three days may be complied with.

If notice be given by ordinary mail, it should actually be received by Tuesday, or if not claimed from the post office, the date of the first notice of the postmaster should be at least five (5) days before Tuesday.”

8. With all due respect, it is submitted that the correct answer to the question is Monday.

9. Is the law clear or not clear? CLEAR. There appears no reasonable doubt as to its meaning. As to the copy of the motion, the rule requires the movant to “ensure its RECEIPT by the other party at least three (3) days before the date of HEARING.” The rule contemplates two (2) events:

a. Date of RECEIPT, and
b. Date of HEARING.

In between these two events is the period of three (3) days.

10. If, as the SC ruled, the date of RECEIPT may be Tuesday, there will only be two (2) days – Wednesday and Thursday – before the date of HEARING, or Friday.

11. Hence, the date of RECEIPT must be Monday in order that there will be at least three (3) days – Tuesday, Wednesday and Thursday – before the date of HEARING, or Friday.

12. In computing any period of time prescribed or allowed by law: “…the day of the act or event from which the designated period of time begins to run is to be excluded…” (Sec. 1, Rule 22, RULES OF COURT). Consequently, the date of RECEIPT from which the minimum three-day period begins to run – is EXCLUDED.

13. In Preysler, the OPPOSITE was done. The date of RECEIPT from which the minimum three-day period of time begins to run – was INCLUDED.

14. It would thus appear that Preysler illustrates the danger of CONSTRUING, instead of simply applying, a CLEAR provision of law.

15. The question that naturally arises among law students and legal practitioners is:

WHETHER THE PREYSLER RULING IS GOOD OR BAD FOR THE RULE OF LAW?
Candidly, not good.