Monthly Archives: May 2015

Militant group hits House move to ease land ownership restrictions

Two significant events related to land ownership happened yesterday – one that launched a movement to honor land reform, and the other, the approval on second reading of a House Resolution on foreign ownership of land and utilities.

Launched was the Philippine Land Reform Movement (PLRM) at the University of the Philippines at Diliman (UP-Diliman).

Meanwhile, at the House of Representatives, Resolution of Both Houses No. 1 (RBH 1), authored by Speaker Feliciano Belmonte, Jr., was approved on second reading. RBH 1 seeks to ease the restrictions on foreign ownership of land, to boost foreign investments.

  The Philippine chapter of the International League of People’s Struggle (ILPS) said even as PLRM was being launched at the UP Diliman, “Belmonte and his cohorts were crafting the dismantling of the domestic economy,” said ILPS-Phils, a human rights group.

 The group claimed that RBH 1 will pave the way for the removal of the protectionist provisions of the 1987 Constitution. The group said that RBH 1 seeks to scrap the constitutional restrictions on foreign ownership of land, resources, utilities and other key industries.

 “The so-called economic charter change (Cha-cha) is opening the floodgates for more land grab, speculation and domination by local billionaires and foreign monopolies of the country’s economy,” ILPS-Phils chairman Elmer Labog said.

 “This will aggravate not only an economic slowdown but is sure to result in worsening poverty, hunger and misery for majority of Filipinos,” he added.

 More than 1.2 million hectares are already under onerous agribusiness contracts, the group said.

Based on data from the National Statistics Office (NSO), a total of 872,892 hectares of agricultural lands have been converted to other uses.

Extending the Comprehensive Agrarian Reform Program would expand the coverage of land reform exemption, exclusion and conversion by 700,000 hectares.

Land lease arrangements, including leases by foreign transnational corporations, covered 1.7 million hectares from 1988 to 2012.

 “Cha-cha’s 100-percent foreign ownership of lands is directly in contrast with fundamental land reform demanded by the people.  It will directly impact the nation’s development and sustainability,” the group added.

 “We are resolute, together with the patriotic and progressive sectors, to oppose and thwart Aquino’s Cha-cha,” ILPS-Phils declared.

RBH 1 is titled as “Proposing amendments to certain economic provisions of the 1987 Constitution of the Republic of the Philippines particularly on Articles II, XII and XVI.”  One of the reasons for the amendment said that “in order to realize the full benefit of inclusive growth, the restrictive economic provisions in the Philippine Constitution which hamper the flow of foreign capital investments must be lifted.”

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recognition: Strengthening Philippine climate adaptation

The Philippines has received recognition for its strong climate change policies and legislations. The country is on the right track in the mainstreaming of climate change, because it looks at issues from national agencies down to local government units, the United Nations Development Programme (UNDP) said during a Climate Vulnerability Forum in Manila. The UNDP cited Republic Act (RA) 10171, the People’s Survival Fund Law that assesses vulnerable communities and how they would be funded for local climate adaptation, integrating land use planning to ensure maximum impact.

Hosted by the Philippine Climate Change Commission (PCCC) on May 20-21, 2015, the forum identified major climate change policies for vulnerable developing countries like the Philippines. PCCC, an independent and autonomous body, was established by Republic Act (RA) 9729, Philippine Climate Change Act of 2009 on October 23, 2009, so the country can better prepare and respond on natural disasters. A National Framework Strategy on Climate Change was drafted for 2010-2022 to strengthen the adaptation of natural ecosystems and human communities to climate change.

Adhering to the Kyoto Protocol ratified on November 20, 2003, the Philippines enacted and implemented major legislation to advance the global community’s agenda on environmental preservation. These are RA 8749 (Clean Air Act of 1999) to mitigate worsening air pollution problem; RA 8435 (Agriculture and Fisheries Modernization Act of 1997) that takes into account climate change, weather disturbances, and annual productivity cycles in agricultural and fisheries programs; RA 9003 (Solid Waste Management Act of 2000) providing a comprehensive solution to the garbage problem; and RA 9275 (Clean Water Act of 2004) providing for comprehensive water quality management scheme.

The Philippines and France led the Manila Call to Action on Climate Change launch on February, 2015, which calls on nations to secure a universal and ambitious climate program and support the transition from fossil fuels to sustainable energy at the UN Convention on Climate Change to be held in December in Paris, France.

The Philippines is at the forefront of the fight against climate change, especially after it was hard-hit in 2013 by super-typhoon Haiyan (Yolanda), one of the most damaging storms in world history. It is still reeling from the devastation, building new disaster resilient homes, improving water and power supplies, and helping people to again make a living.

The Intergovernmental Panel on Climate Change has warned that countries like the Philippines could become even more exposed and vulnerable to stronger typhoons and extreme weather conditions. It asked governments to take immediate action towards a low-carbon path and curb human and economic losses. Delay would mean not only worse typhoons and hurricanes, droughts, fires, and flood for many nations.

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New platform for investments in ancestral lands

Under the Mindanao Indigenous Peoples (IP) Desk, which was launched on Tuesday, businesses and investors alike will help guide companies in securing free, prior and informed consent (FPIC) from IP groups, among others. FPIC is required by the Indigenous Peoples Rights Act before business can enter IP areas.

An initiative of International Alert (IA), National Commission on Indigenous Peoples (NCIP), and the Mindanao Business Council (MinBC), the desk will have members from the three organizations, officials of local government units, and representatives of IPs. The desk will also feature a database on conflict information and ancestral domains, besides resource maps and development plans on ancestral domains.

The group wants the IP Desk to be both about wealth creation alongside the protection and promotion of the rights of IPs, IA Deputy Country Manager Nikki Philline C. de la Rosa said.

“The IP Desk is the crystallization of the desire to institutionalize the relationship between government, business and the IP communities,” said IA Country Manager Francisco J. Lara, Jr.

On Tuesday, Mr. Lara from IA, NCIP Chairperson Leonor O. Quintayo, and MinBC Chairman Vicente T. Lao also ceremonially signed a memorandum of cooperation “agreeing to collaborate and support the establishment of an IP Desk in MinBC.” The original signing was “last month,” Ms. de la Rosa said on the sidelines of the event.

A technical working group from the parties will finalize the IP Desk’s terms of reference including “roles, responsibilities and implementing guidelines.”

For his part, MinBC Executive Director Rolando A. Torres said that current business challenges “dynamics in frameworks, access to information and security.”

Besides pointing out “inconsistencies in local and national policies and political boundary conflicts in ancestral lands,” there are instances where “communities are misrepresented.” There is also a “lack of information on the location of investments,” Mr. Torres said.

There is a “need of education and information on the traditions and practices of indigenous communities,” said Mr. Torres.

Mr. Torres acknowledged that investors need to protect their investments, employees and facilities but said that there are instances where there are “semblances of creating private armies.”

“All concerns would lead to the most important issue faced by investors… the challenge on how to regain the trust of the communities,” said Mr. Torres.

According to Mr. Torres, IPs have been subject to “unfriendly policies before of the government.” Also, “previous investors have been “resorting to payoffs to continue business” and some have gone around the process of securing FPIC.”

There are also “concerns on harming the environment” by investors entering IP areas and the “cases of human rights violations” prevalent during the ’70s and early ’80s are still remembered by IPs, said Mr. Torres.

In 17 years, the NCIP has granted 180 certificates of ancestral domain which translates to 4.7 hectares of land, with 92 certificates granted in Mindanao, translating to 2.2 hectares of land. — E. E. Escaño

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Land I can call my own: Tax procedures for real property acquisition

Acquisition happens via sale, donation, inheritance, a swap of ownership, or as payment of debt. Whatever the mode of transfer, ownership is only secure when the transferee’s name is annotated in the Transfer Certificate of Title (TCT), Condominium Certificate of Title (CCT) or Original Certificate of Title (OCT).

With the real estate boom of recent years, many have jumped on the bandwagon and purchasing property of their own. It therefore comes as no surprise that many have fallen into the trap of purchasing real properties which they cannot register in their names, either because they have not secured a Certificate Authorizing Registration (CAR) or the title to the property is bogus.

In other words many still fail to observe the processes prescribed by law. Others exercise due diligence too late, when penalties have already piled up.

On April 17, 2015, the Bureau of Internal Revenue (BIR) circularized the Memorandum of Agreement (MoA) between the Department of Finance, the Department of Justice, the BIR and the Land Registration Authority (LRA) dated Sept. 25, 2013. The MoA aims to plug all loopholes to prevent tax leakage and to properly ensure that all taxes due to the government are collected before registration or transfer of real property is effected by the Register of Deeds (RD). With the MoA, the concerned agencies undertake to expedite the delivery of services to the public and simultaneously, promptly collect the tax due.

The MoA focuses on inter-agency linkages to achieve better monitoring and control over real property transactions. The BIR’s role in achieving the MoA’s goal is to issue CAR, furnish reports on CAR issued and generated online to the RDs for online automated verification as to authenticity by LRA, and receiving and matching electronic reports from LRA on the New Number generated for the newly issued TCT/CCT/OCT.

On the other hand LRA and the RDs are to provide linkage, comparing information relating to all Real Property Transfers against the CARs issued by the BIR. The LRA shall also ensure the development, implementation, and operation of the online automated verification of the CARs presented to the RD through its Land Titling Computerization Project (LTCP). LRA shall also ensure, through the LTCP, the development, implementation, and operation of an automated system that shall provide BIR with monthly electronic reports on new TCT/CCT/OCT, immediately upon their issuance and inclusion.

It is fairly well known that the transfer of a real property requires the issuance of a CAR to the transferor. However, with enhanced communications among agencies, a finding of tax deficiency remains possible even after the real property is registered with the RD under the name of the transferee. To avoid this problem, the transferor must comply with the CAR requirement of the BIR. The parties must know what taxes they will have to pay for.

For instance, in a sale transaction, the owner will be required to pay capital gains tax (CGT) pursuant to Section 24 (D) in the case of an individual seller or Section 27 (D)(5) in the case of a corporate seller. It must be noted that the BIR shall compute the CGT liability of the seller based on the selling price, the fair market value based on the BIR’s zonal valuation, or the assessed value based on the tax declaration of the Local Government Unit which has jurisdiction of the real property, whichever is highest. Moreover, the documentary stamp tax (DST) pursuant to Section 196 of the Tax Code must be paid by any of the parties that have agreed to bear the tax liability.

It is also important to note the deadline within which the CGT returns or DST returns should be filed to avoid the running of the interest of the tax due. The DST should be paid on or before the 5th day of the next succeeding month when the deed of sale is executed. On the other hand, the CGT on sale, exchange or disposition of real properties treated as capital assets (those that are not actually used in the business) shall be filed within 30 days following each sale, exchange or disposition. It shall be filed and the taxes due thereon be made to an authorized agent bank in the appropriate revenue district.

In addition, sellers who convey their real properties which are considered ordinary assets shall report the sale as part of their income and subject the same to value-added tax. The buyer on the other hand, is required to subject the payment to expanded withholding tax which shall be filed on or before the 10th day of the next succeeding month when the deed is executed, subject, however, to the specific rules prescribed by Revenue Regulations No. 2-98, as amended, and the rules prescribed in the eFPS regulations, in case the taxpayer is duly registered with the same. The returns shall also be filed in the appropriate revenue district.

In 2003, the BIR issued Revenue Memorandum Order No. 15-2003 (RMC 15-2003) prescribing policies, guidelines and procedures in the processing of One-Time Transactions and the issuance of CAR on various transactions which include transfer of real properties. Taxpayers must be aware of the checklist of documentary requirements on sale of real property subject to CGT, foreclosure sale of real property, sale of real property classified as real assets, sale of real property under the Community Mortgage Program, tax-exempt sale of principal residence, transfer subject to donor’s tax, transfer subject to estate tax, and sale of real property under Socialized Housing Program as Certified by the HLURB. The BIR is strictly implementing RMC 15-2003 and non-compliance entails non-issuance of the CAR.

After the issuance of the CAR, the buyer must use it within one (1) year, otherwise it is considered revoked and the buyer must apply for CAR again.

The MoA opens a lot of doors towards responsible transfer of properties. The rules and regulations have been there for a long time, but many choose to ignore it. By ignoring these requirements, transferees cannot be wholly secure in their ownership and penalties keep piling up over time. Transferees of real property must be vigilant that the transferor has done everything to comply with his tax and other obligations with the BIR.

While investing in real property promises a brighter future for the investor, doing it the right way should be a primordial consideration to avoid future complications, the resolution of which consume a lot of time, money and peace of mind. After all, buying a little piece of that earth requires that we expend some of the fruits of our labor earned over many years.

Eliezer P. Ambatali is a tax associate with the Tax Advisory and Compliance division of Punongbayan & Araullo. P&A is a leading audit, tax, advisory and outsourcing services firm and is the Philippine member of Grant Thornton International Ltd.

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Dusit to build P2-B hotel in Davao

By Richmond S. Mercurio (The Philippine Star) | Updated May 1, 2015 – 12:00am

MANILA, Philippines – Thai hotel chain Dusit International is bringing its dusitD2 brand to the Philippines, with Davao as its first site.

Dusit International plans to tap the burgeoning economic activity in Davao City with the entry of dusitD2 Davao, an upscale hotel that will cater to local and international business travelers.

The hotel will be built adjacent to the Dusit Thani Residences development and will be developed in partnership with local property firm Torre Lorenzo Development Corp.

DusitD2 Davao will be the first dusitD2 hotel in the Philippines when it opens by 2018.

“Dusit International created the dusitD2 brand with today’s travellers in mind. It features high-tech and modern conveniences coupled with contemporary design as seen in the world-class amenities and overall aesthetics of the hotel. We are confident that this will match the youthful vibe and excitement of Davao City,”said Ryan Chen, Dusit International director of development for Asia Pacific.

Chen said dusitD2 Davao guests would enjoy the same five-star treatment and gracious hospitality that is the trademark of Dusit across all its hotels around the world.

Dusit Thani Residences, a luxury apartment complex featuring 168 full-service residence units, and dusitD2 Davao is Dusit International’s maiden entry into the Davao market.

“With prime real estate locations, world-class infrastructure and facilities, Davao City is quickly becoming a choice venue for Filipino entrepreneurs, as well as investors from Asia Pacific and beyond. Just outside the city limits are destinations and vacation spots where one can enjoy the beach and other natural resources, creating a great work-life balance for both local residents and visitors,” the Bangkok-based hotel group said.


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