The House-approved tax reform bill is not your TRAIN to SUS(tainability) TRAN (sition)

Elpidio V. Peria
11 June 2017

from :

The Philippine House of Representatives recently approved the much-awaited tax reform measure of the Duterte administration, the so-called TRAIN (Tax Reform for Acceleration and Inclusion) – aimed at generating the needed resources for the delivery of basic services and providing economic relief to salaried workers and other income earners.

This blog post however will not look at the merits of the new taxation schemes and tax exemptions in their entirety but will instead focus on the whether the measures in this approved House version of the tax reform bill will enable the country to take further steps toward sustainability transition, that long-term effort to enable our economy and society to transform itself so that it can better cope with the challenges of climate change and sustainable development.

If we have this sustainability transition lens in looking at this bill, the immediate item that should catch our attention is the excise tax on diesel fuel which is now increased progressively yearly within the next three years from being taxed at zero (0) now to 3 pesos in Jan 1, 2018; to 5 pesos in Jan, 1, 2019; and to 6 pesos in Jan. 1 2020.

The Department of Finance (DoF) is of the view that this impending diesel price increase will not jack up food prices or jeepney fares that much based on similar abrupt price increases in diesel from January to December 2016 and in the period 2010 and 2012.

Even the National Tax Research Center (NTRC) noted in a study it did recently in January 2017 that even jeepney fare rates will not rise as much as in fact such fares have already increased in anticipation of a fuel tax hike this July 2017. Based on the historical table (Table 13 in the study) that they have come up with, in the period after 2009, if the price increase in diesel fuel will increase by greater than 50%, this will generate an additional Php 1 increase in jeepney fares : this happened between the period February 2009 when diesel price was at Php23.00 and it increased to Php 37.75 in January 2011 and in the period between January 2016 where diesel price is at Php 20.20 and February 2017 where diesel price is at Php 31.00. In these periods, the jeepney fare rate increased at Php1.00. Perhaps with these three year successive increases of diesel prices, the jeepney fare rate may not increase more than Php1.00 within the three year period.

But perhaps the DoF is only looking at diesel fuel, but there are also a full range of other petroleum products (lubricating oils and greases, processed gas, waxes and petrolatum, denatured alcohol to be used for motive power, naphtha, regular gasoline and other similar products of distillation, leaded or unleaded petroleum gasoline, aviation turbo jet fuel, kerosene and liquefied petroleum gas, the latter are those that are used in homes for cooking and lighting, asphalts, bunker fuel oil) that will also be taxed in an increasing manner within a three-year time frame. The Senate should look closely how the totality of these petroleum products will contribute to price increases on all other goods and services the production of which will depend on the use of these other petroleum products. This will also serve as a check to validate these assurances of the DoF and NTRC on negligible price increases from these measures.

In that same study of the National Tax Research Center we have seen, these taxes on petroleum products are already accounted for and they foresee no problem with increasing the tax rates in these products since they haven’t been increased since 1996 and the Philippines has the 2nd-lowest excise tax rates in the ASEAN region.

While the House-approved tax measure provided for some earmarking of not more than 40% of the yearly incremental revenues from the petroleum excise tax for a social benefits program, it has not provided for specific funding to develop research and development into alternative fuels in order that there is a clear effort towards developing alternatives to fossil fuels and hence facilitate behavioral shifts in the use of diesel and similar fossil fuels.

In our earlier post on this topic, we proposed to make the increase in these excise taxes gradual, even suggesting the totality of the 6-pesos increase be fully implemented even beyond the entire term of President Duterte. This is to enable other coordinative measures by other agencies to kick in, like an accompanying measure to accelerate the development of alternative fuels so that the population will have an alternative to these fossil fuels or some incentives to assist the shift towards a fully-electricity based transportation system.

Ok, hybrid electric vehicles are exempt from excise taxes, but the way it is defined as a four-wheel vehicle in the House-approved tax reform bill leaves out alternatives that may run on two or three wheels. The Senate should look into this again. What about the jeepneys? There should be a clear phase out that should reduce dependence on diesel-guzzling jeepneys , but this should be coordinated with the preferential tax treatment in this bill given to hybrid vehicles in the House-approved measure.

Then we have to look at the other categories of activities that seem to have been left out, what about the coal-fired operating plants, are they exempted from any increases in taxes? The House-approved bill does not seem to touch these entities, especially the taxing of coal and coal substitutes used in these plants.

Looking at other provisions that may not immediately appear to induce efforts towards sustainability transition but in our view will gradually contribute to such efforts, the House should have also given preferential tax treatment to donations to initiatives that promote renewable energy or sustainable agriculture as these are activities that hasten our shift to a more sustainably-run economy or food system that increases our ability to adapt to a warming climate.

Finally, even the constitution of family home could be an opportunity, like giving higher value to houses that have installed energy-saving equipment or are constructed using green architecture principles subject to criteria that may be set up by the Department of Energy and the National Housing Authority. This kind of higher valuation for family homes induces entire Filipino households to use LED bulbs or install solar panels while potentially creating a market that further brings down the prices of these renewable-energy products. This is the kind of up-scaling nationwide that was not there before when the DoE pushed for a shift in compact fluorescent lamps nationwide.

The Philippine Senate has a chance to enhance this TRAIN so that this will truly proceed towards the SUS (trainability) TRAN (sition) of the country in the coming years.


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3 Ways Donald Trump Put the US At a Disadvantage in its Exit of the Paris Agreement

Elpidio V. Peria
4 June 2017

from :

Many commentators already expressed their dismay at how the US has ceded its leadership on this globally important issue of climate change, but from where we sit, here are the ways his short-sighted decision will put the US at a disadvantage :

1) The US loses a seat at the negotiating table where discussions are ongoing to further flesh out how the commitments to the Paris Agreement are to be fulfilled

The Paris Agreement is set to take effect after 2020 and the countries which are Parties to the Agreement are hard at work, more recently in its Subsidiary Bodies meeting in Bonn, Germany just last month in May, to come up with various guidelines for following through with the commitments under the Agreement, like how the Nationally Determined Contributions are to be prepared or what elements of the technology transfer framework are to be further detailed.

With the US now deciding to exit from the Paris Agreement, the US immediately loses the right to effectively participate in shaping up the rules of the various commitments under the Agreement. This was among the reasons why US business leaders wanted the US to remain in the Agreement so that the US can water down these various guidelines and it will not affect the US as much. Paris Agreement may come out eventually stronger without the US trying to dilute its mechanisms of implementation.

Having experienced in the negotiating table of the UNFCCC on technology transfer how formidable the US negotiators are, these seasoned US negotiators and legal drafters will now mainly stay on the sidelines of further discussions and they will not be able to shape it along US interests. When negotiations move to a setting where only Parties to the Agreement can join, then the US will be like the NGOs and other observers who will just remain outside the negotiating room and they will only enter once the main protagonists are finished in their negotiations.

Australian, Japanese and Canadian negotiators, who are part of the UMBRELLLA negotiating group of which the US is a guiding hand, are formidable by themselves, but without a leader like the US with political and economic clout, they may not have such a strong voice now as before, though any one of these countries may come out as the leader of this negotiating group to replace the US.

2) With the market for renewable or clean energy technologies expanding worldwide, it cannot be avoided that trade rules will be increasingly affected by what the Paris Agreement will require countries to do to achieve their climate mitigation and adaptation objectives.

Determining what aspects of trade will be affected by the rules being set up under the Paris Agreement is difficult, but based on an initial analysis by Clara Grodin of the German Development Institute of submitted nationally determined contributions, the following trade elements may play a role in the implementation of a country’s commitments under the Paris Agreement, which the US will now not have anything to do at all, to their disadvantage :

a) Reduction of trade barriers – Parties to the Paris Agreement may agree to have a package of beneficial reduction of trade barriers among them to facilitate the uptake of clean energy technologies;

b) Regulation of timber trade – this involves the determination of how sustainably produced the timber being exported are, which may vary among Parties to the Paris Agreement and now rules may be arrived at on how to give preferential treatment among those who are Parties to the Paris Agreement;

c) Standards and labeling – this involves determination of embodied carbon in products that will then be given preferable trade treatment under the rules of the World Trade Organization;

d) Border carbon adjustments or border taxes – these are taxes that are imposed on products from countries will less stringent climate policies, of which the US will surely become one as it is now out of the Paris Agreement; EU and China will only be too happy to impose these taxes on US export products given how lousy environmental regulations will now be under the Trump administration;

e) Renewable energy subsidies – these are the support given by governments to their renewable energy sector which may be subject to rules on subsidies under the WTO;

f) Fossil fuel subsidy reform – this is similar to the subsidies given to renewable energy above but this time it may be given to phase out the over-all national consumption of fossil fuels, similar to what the Duterte Administration is doing now in its Comprehensive Tax Reform Package in Congress where the prices of diesel are taxed in order to discourage its consumption;

g) International market mechanisms – these are the carbon trading arrangements that are still being discussed at the moment inside the UNFCCC but may now be expanded under the Paris Agreement in various iterations;

h) International technology transfer including intellectual property rights – this involves rules on how developing countries may gain access to patented technologies, either by relaxing the rules on how the patents may apply on these technologies, or by giving interested countries some subsidies so these technologies may be used and applied in developing country markets;

i) Response measures – these are the totality of actions a country trying to implement climate change mitigation and adaptation policies will have to do including the wholesale transformation of a country’s entire energy grid or substituting its food supply which are mainly producing export commodities to one that more or less approximates its sustainable agriculture goals.

3) The governance architecture of the Paris Agreement will effectively exclude the US now that is has to evolve to give increasing roles to sub-national entities including non-state actors like corporations, to offset the emissions gap that will not now be fulfilled by the US

Professors Charles F. Sabel and David G. Victor talked about experimentalist governance which underpins the mechanism behind the Paris Agreement, where various ways are attempted to find the best way of achieving bottom-up international policy-making.

With various US states like California and cities like New York, including giant TNCs like Apple, Google, General Electric and Walt Disney committing to act to address climate change, various mechanisms will have to be developed within the Paris Agreement, including perhaps its amendment in due time, to enable these entities to let its efforts on climate change mitigation and adaptation count. This will need to be a long-term and sustained effort and with the entire world demanding action on climate change, Trump’s deplorable decision the past few days may just become a footnote of history in the long term.


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Mindanao Martial Law Declaration May be Fatally Defective

Elpidio V. Peria
25 May 2017

Government troops  moving into position in Marawi City (from :

Proclamation No. 216 declaring martial law in Mindanao has recently been circulated in the web and looking at its WHEREAS clauses which serves as justification for the martial law declaration, it appears that such declaration is fatally defective for the following reasons :

1) the Maute stand-off in Marawi City is characterized as a rebellion when apparently it is terrorism

The 3rd and 4th Whereas clause describes the Maute Group as a “terrorist” group and as such the crimes to which they should be charged with is terrorism, which is actually penalized by Republic Act 9372, but the Constitution is explicit in allowing the invocation of the President’s martial law powers only in cases of lawless violence, invasion or rebellion. The wisecracks may point to terrorism as lawless violence, but given that there is a law defining terrorism, terrorism cannot now be easily equated with lawless violence easily, this will most likely not withstand legal scrutiny.

If we go by the cases cited by the great Revised Penal Code commentator Luis B. Reyes (18th edition, 2012), he described the nature of the crime of rebellion as a crime of the masses, of a multitude and a vast movement of men and a complex net of intrigues and plots. A handful of Maute group warriors spread widely over certain portions of Marawi City and those doing the acts described in the 5th whereas clause is clearly not such multitude and vast group of men.

2) the declaration referred to other reasons under the previous Proclamation of national emergency from the Davao City bombing in Feb 2016 which are not completely spelled out in this martial law Proclamation.

The 4th whereas clause reads : “part of the reasons for the issuance of Proclamation No. 55” means there are another set of reasons that are not spelled out in this Proclamation, what are they? Are they the acts enumerated in the 5th whereas clause? If we look for the connective word between the 4th and 5th whereas clause, it is the reference to the Maute group as the “same” Maute terrorist group and if we take on the implications of this reference, meaning the first effort under the first Proclamation actually failed since here is the same group again, doing the same thing that they are doing, but this time the Government response is different. Sen. Saguisag appears to be right in saying over ANC cable news channel  that this martial law declaration is an admission of failure on the part of the government in stopping the Maute group the first time. The  other reasons, including reasons for the failure of the original Proclamation, should have been clearly spelled out here now, justifying the martial law declaration.


WHY THIS MATTERS : Any citizen who may wish to question the sufficiency of the factual basis for the declaration of martial law will only have to look at the four corners of the Proclamation and point these out to the Supreme Court so that this Proclamation may be knocked down legally for lack of sufficient factual basis.

Just to be sure, however, let’s watch out for the President’s report to Congress as he may put forward other information, including perhaps classified intelligence information there justifying the martial law declaration before or within 48 hours from the issuance of the Proclamation and if we look at the date when he issued the Proclamation, straight from Russia, on 23 May 2017, his 48 hours should be up within today.


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Martial Law in Mindanao : What Happens Now?

Elpidio V. Peria
24 May 2017

from :

The President has just declared Martial Law, the ANC cable news has been reporting apparently repeatedly which I only paid attention to only now, at around 10am, and though a quick search of the government’s Official Gazette website has not yet yielded any official proclamation issued for this declaration.

First things first, people should not panic. From the 1987 Constitution, readers of this blog should be mindful of para. 4, section 18, ArticleVII which explicitly spells out that a state of martial law :

a) Does not suspend the operation of the Constitution, and the important thing to note here is that Filipino’s Bill of Rights there are NOT set aside, so there should be no warrantless arrests and unreasonable searches and seizures made as a result of this proclamation as the right of the people to be secure in their persons, houses, papers and effects are still in effect;

b) nor supplant the functioning of the civil courts or legislative assemblies, this means those who have cases in court should continue to go to the courts as scheduled as they continue to exist and the Congress and all the other legislative bodies in the local government units are still functioning and should continue in their regular conduct of business;

c) nor authorize the conferment of jurisdiction on military courts and agencies over civilians where civil courts are able to function, this means that civilians like all of us in Mindanao would continue to go about our own affairs today and till the day this declaration is lifted as no military court or government agency will have the right to make decisions on what civilians can and cannot do;

d) nor automatically suspend the privilege of the writ, which refers to the writ of habeas corpus, which is the remedy for those who may be illegally picked up when military checkpoints may be set-up, so those who may be picked up as a result of this martial law declaration can still avail of this legal remedy but as per recent experience on this, those picked up should NEVER sign any waiver that may be put in front of them in case they may be arrested without warrant. Those picked up should NEVER sign and ask for their own lawyer and if a PAO lawyer may be provided to them, this lawyer should explain to them the consequences if they sign such waiver.

Under the same provision of the Constitution, what happens now are the following :

a) within 48 hours from his proclamation, though there may be debate when this countdown will start as it is not sure when the official proclamation was made, the President shall submit a report in person or in writing to Congress;

b) the Congress, voting jointly or by a vote of at least a majority of all its Members in regular or special session, may revoke such proclamation, which revocation shall not be set aside by the President.

c) Upon the President’s initiative, the Congress may, in the same manner, extend such proclamation for a period to be determined by Congress, if the invasion or rebellion shall persist and public safety requires it.

Any citizen may question the sufficiency of the factual basis of the proclamation of martial law direct to the Supreme Court and the Supreme Court must promulgate its decision within 30 days from filing.

For those who have experienced Martial Law, President Duterte’s assurance in the ANC news clip that it will be just like the Martial Law during the 70s is precisely the kind of statement that only fuels greater anxieties among the people.

People should also watch out for OA (over-acting, thus excessive or unnecessary) actions of the police and military in setting up checkpoints in key thoroughfares in Mindanao and perhaps they may be emboldened in being more intrusive and arrogant during these usual check-ups, so these should be resisted and they can only ask that the side-mirror be opened but they cannot actively search into the glove compartment nor ask for bags to be opened up. For me, my worry is my younger brother who has to return my vehicle from Cotabato City to General Santos City, hopefully he may be able to get here tomorrow and included here is a wish for him to travel safely tomorrow.


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Elpidio V. Peria
9 April 2017

S. Africa’s climate activists taking action related to their climate suit  against their government and a coal-fired power plant company

from :

A news article heralded one of the first climate change litigation efforts in South Africa whereas in India, a 9-year old girl sued the Government so it may speed up its climate change efforts, while in South Korea, a woman who is suffering from asthma along with her children, sued her government and China, so that the two countries will undertake common efforts to reduce the fine particulate dust resulting from the two country’s numerous cars and industries that exacerbate mainly air pollution in the two countries.

On 8 March 2017, the North Gauteng High Court handed down a landmark ruling in Earthlife Africa Johannesburg’s (ELA) case against the Minister of Environmental Affairs, the Department of Environmental Affairs (DEA), and Thabametsi Power Company (Pty) Limited.

The court said that Earthlife Africa (ELA) was correct in claiming that the Minister should have considered the new power station’s climate change impacts before deciding whether to authorise it.

The report also noted that no appeal has been lodged by any of the parties against the judgment, and the deadline for the lodging of an appeal has now expired, which makes such ruling, barring any other development, for all purposes, final.

In South Korea, Choi Yul, president of the Korean Green Foundation along with his attorney Ahn Kyung-jae, motivated five other individuals to lodge a joint lawsuit against Seoul and Beijing on Wednesday for physical and mental damages caused by the “fine dust” particles filling the air.

Each of the plaintiffs are demanding 3 million South Korean won ($2647) in compensation, but they say the money is only symbolic — what they really want to accomplish is to induce the two governments to reduce toxic smog, a result of too much dependency on carbon fuels and millions of cars.

In India, a 9-year old child, Ridhima Pandey, filed a petition with the National Green Tribunal (NGT), a special court for environment-related cases, asking the tribunal to direct the government “to take effective, science-based action to reduce and minimize the adverse impacts of climate change.”

These actions should encourage like-minded citizens all over the world to also take their own similar initiatives to spur their governments into action in addressing climate change.


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Designs Found in Cheerleader Uniforms are Copyrightable, says US Supreme Court

Elpidio V. Peria
2 April 2017

from ://




The US Supreme Court recently held last 22 March 2017 that designs incorporated in cheerleading uniforms are copyrightable, making it now difficult for small entrepreneurs to just mimic these same designs and pass these designs off as their own, if they were not able to apply for copyright on them first.

Of all things that may be subjected to litigation, this case involved the lines, chevrons (a line or a shape in the form of a V or an inverted V, especially one on the sleeve of a uniform indicating rank or length of service- from ) and colorful shapes on a uniform worn by cheerleaders, which was copied by a smaller company, in this case Star Athletica LLC, from that of a bigger company, Varsity Brands, Inc.

Writing for the majority, Justice Clarence Thomas, applied the text of the US Copyright law here, saying :

A feature incorporated in the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic or sculptural work – either on its own or fixed in some other tangible medium of expression – if it were imagined separately from the useful article into which it is incorporated. This test is satisfied here.

The US Supreme Court found the designs, lines and shapes have a distinct existence or is separable, even if they are placed in another two-dimensional medium, like a wall, for example, thus making them copyrightable.

While this seems straightforward, intellectual property law experts consulted by the fashion magazine Vogue said that while copyright law protects certain types of artistic and creative expressions, patent law protects innovations based on their usefulness and novelty. This case dealt with a tricky middle ground : copyright law can protect aesthetic features of a design for a useful article, but only if they are distinct enough from the article’s useful or functional aspect. The question then becomes how do we define what is useful and what is not? The expert said that this will only be clarified only later when this ruling is eventually applied in the cases that will follow it.

In a further analysis done while the case was pending in the US Supreme Court, Cornell University presented two contending views :

One, with public advocacy group Public Knowledge which said that copyrighting a useful article’s design features without a stringent inquiry into separability will stifle individual creativity, as individual consumers depend upon their ability to take existing products and adapt them. Strong copyright protection will dampen this creative energy and will negatively affect the economy. The group also pointed out that the fashion industry has been fine thus far without extended garment design feature protection and in fact demonstrates a “pirates paradox” where rampant copying facilitated creativity. Even other industries, like cuisine and comedy flourished without broad copyright protection. Law school professors cited by Public Knowledge also argue that allowing Varsity to copyright these designs will enable Varsity to have a monopoly since with copyright protection of its designs, only Varsity will be able to create cheerleader uniforms with such designs.

The other view is by the Council of Fashion Designers in America, Inc. (CFDA), which argues that broader copyright protection is necessary for the fashion industry to grow. They point out that advancing technology has allowed people to copy fashion designs at a higher rate with reduced costs, as a result, copyists can cut all of the costs that emerging designers often need to put into their business. CFDA maintains that these factors may contribute to a decrease in fashion innovation.

Now that the US Supreme Court has decided, Filipino lawyers would very easily invoke this in our local Philippine setting and our concern here should be on those tailoring shops that mimic the uniforms of famous NBA or PBA teams, even the numbers of famous players, like Michael Jordan’s number “23” which is found in many shirts of wannabe basketball players pounding the hardcourt, will these players and tailoring shops be stopped from doing what they are usually doing now? Most likely, it will be companies abroad, like in the US, who may have copyrighted these designs, who will stop these tailoring shops and players, Or these may spur entrepreneurial companies to start a copyright application frenzy to capitalize on Pinoy’s taste for foreign designs.

What about those unique features of festival attire in our year-long fiesta celebrations? Will they be copyrighted too? Perhaps the Department of Tourism should pre-emptively copyright them so that it belongs to all Filipinos and not to greedy entrepreneurial types who will only profit not from the creativity of others but may have the foresight to make money on these existing designs.

Or perhaps the Copyright Bureau of the Intellectual Property Office should just not follow this ruling and come up with a uniquely Filipino solution to this soon-to-be copyright conundrum in our side of the globalized intellectual property world.


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This US Supreme Court case may make illegal the buying and selling of computer printer toner refill

Elpidio V. Peria
26 March 2017

from :

A US Supreme Court case, Impression Products, Inc. v. Lexmark International, Inc,  may soon either extinguish or sustain the practice of using computer printer toner cartridge refill and considering the popularity of these types of refills here in the Philippines, this will surely have an impact on businesses that rely on the secondary market on refilled toner cartridges.

Last 21 March 2017, Impression Products, Inc., a US company engaged in the remanufacture of toner cartridges by acquiring used Lexmark toner cartridges, refurbishes them and sells these cartridges again in competition with new and refurbished cartridges sold by Lexmark, filed a petition for certiorari before the US Supreme Court as the federal appeals court ruled against Impression for its acts of reselling Lexmark toner cartridges.

The original cartridge manufacturing company, Lexmark International, Inc, would prefer that its customers return their empty cartridges to it for refurbishment and resale, rather than sell the cartridges to a remanufacturer. It offers its customers the option to purchase a “Return Program Cartridge” at a discount of roughly 20%, subject to a single use/no-resale restriction. These cartridges contain a restriction that “the buyer may not reuse the cartridge after the toner runs out and may not transfer it to anyone but Lexmark once it is used.”

The key question in this case is : is the patent over the toner cartridges exhausted once the cartridges are sold with a condition that constitutes a post-sale restriction, or to put it in other words, when does the rights of a patent holder over the patented product stop, at the point when it is sold, or can the patent holder still claim monopoly rights over the patented product provided the patent holder communicated to the buyer that such monopoly rights still remain because the patent holder said so?

` A key principle of patent law is the “first sale” doctrine or the doctrine of “exhaustion”, where the authorized sale of a patented article gives the purchaser, or any subsequent owner, a right to use or resell that article. This is because the initial authorized sale of a patented item terminates all patent rights to that item. The unresolved item here is whether the principle of exhaustion will apply when the patent holder expressly communicated to the buyer that it is trying to restrict the further sale of the patented article.

This is a big issue since many Filipinos, or even in the US, depend on these refillers so that they may be able to keep up with the very high prices of these computer printer toner. If the patent owner wins this case, then the monopoly of the toner cartridge manufacturer becomes absolute it will often lead to abuse by way of lousy after-service or even atrociously high prices of toner cartridges.

How will the US Supreme Court decide? We will soon find out and will report on this here in this blog.


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