DAILY NEWS Vol

THE

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WEATHER FORECAST

The Nation METRO MANILA 24°C to 31°C • Senate investigation on hostage taking Moderate Southwest starts Manila Bay: Moderate

• New MPD OIC accused of kidnapping HK drug suspects Currency Currency in 1 Peso in COUNTRY • GMA hits Aquino administration for in Peso US$1 Currency

hostage fiasco EXCHANGE RATE

• 25-member CA panel completed US (dollar) 45.32600 1.00000 0.02206 Japan (yen) 0.53550 0.01182 1.86741 • Lapus, 6 others face probe on noodle scam UK (pound) 70.05590 1.54560 0.01427 Hong Kong (dollar) 5.82820 0.12858 0.17158 Canada (dollar) 42.74830 0.94313 0.02339 The Economy and Business Australia (dollar) 40.03650 0.88330 0.02498 New Zealand (dollar) 31.61030 0.69740 0.03164 • 6Growth of 7.9% in 2Q EMU (euro) 57.35550 1.26540 0.01744 • BIR files P5.5-B tax evasion case vs trader • Competitiveness still a concern for SMEs / PESO–DOLLAR RATE • BSP raises inflation forecast for 2011 30 trading days to August 26, 2010 Open: P 45.270 • 3 toll roads up for bidding in Oct. 44.50 Close: P 45.130 • RP prepares for EU check on aviation 45.00 safety standards High: P 45.100

45.50 Low: P 45.270

Corporate Briefs 46.00 W.A.: P 45.152

• San Miguel Brewery Inc. retains PRS Aaa Vol: 921.80 M 46.50 credit rating

• AB Holdings Corp. raises stake in Landco 47.00 Pacific Corp. • Benguet Corp. hopes to reach an PSE COMPOSITE INDEX 30 trading days to August 26, 2010 Open: 3,567.71 agreement with St. Augustine Mining

3700 Close: 3,595.58

High: 3,600.83 3600

Low: 3,567.23 3500 Index: 3,595.58 3400 Vol: 1.134 B

3300 Val: P 3.831 B

3200

Disclaimer: The articles in this Daily News have been culled from various media sources. We cannot, therefore, vouch for the accuracy of what is reported. 1

THE NATION

Senate investigation on hostage taking starts The Senate has started its investigation on the hostage taking incident with several members of the police force giving details on what really took place. It was also revealed that Manila Mayor Alfredo Lim was head of the crisis management committee handling the hostage incident last Monday that left 8 Hong Kong tourists dead, the chief of the city’s police force. “It’s Mayor Lim,” Chief Superintendent Rodolfo Magtibay, Manila Police District (MPD) director on leave, told a joint hearing by the Senate committees on public order and on justice, when asked who was in charge during the 11-hour standoff in front of the Quirino Grandstand in Rizal Park. Magtibay said Lim, as head of the committee, ordered the arrest of the policeman brother of the hostage taker, dismissed police officer Rolando Mendoza. The arrest was said to have triggered Mendoza’s shooting rampage. Mendoza was later killed by a sniper. But Lim denied Magtibay’s claims, saying the police chief himself had assumed “full responsibility” for the bungled hostage rescue. Senators acknowledged the country’s security forces need more funds for equipment and training.

New MPD OIC accused of kidnapping HK drug suspects A former police undercover agent described as an “insult” to the Hong Kong people the appointment of Senior Superintendent Francisco Villaroman as acting director of the Manila Police District (MPD), replacing Chief Superintendent Rodolfo Magtibay who went on leave following the mishandling of the hostage rescue operation in Rizal Park last Monday. Mary Ong, alias Rosebud, expressed opposition to the appointment of Villaroman, whom she said has several pending cases filed at the Sandiganbayan, including the alleged kidnapping of 2 Hong Kong residents who were suspected drug dealers. “Insult adding to injury to the Hong Kong people. Two Hong Kong families have filed kidnapping charges against Ping Lacson, Acop, and Villaroman, et al,” said Ong, referring to fugitive Sen. Panfilo Lacson, former Chief Superintendent Reynaldo Acop and Villaroman. Another case was pending in the Sandiganbayan second division, which denied their motion for demurer of evidence, thus Villaroman will have to stand trial.

GMA hits Aquino administration for hostage fiasco The spokesperson of Pampanga Rep. Gloria Macapagal-Arroyo hit back at Malacañang for blaming the former president for the Manila bus hostage fiasco. Elena Bautista-Horn, said the Arroyo administration should not be blamed for the bloody hostage incident in terms of providing training, equipment and funding to the police. “It’s not lack of equipment, it’s more of lack of leadership,” Horn said. Horn said the Arroyo administration also had its share of high-risk hostage crises but all were resolved successfully. She said she has a copy of the list of the inventory of equipment of the Manila Police District and the National Capital Region Police Office that showed they have all the equipment necessary to resolve the situation. Horn particularly took exception to statements made by Interior Secretary Jesse Robredo describing the hostage incident as a domestic issue. “When you have foreign hostages, it becomes a national and diplomatic issue,” she pointed out. If Arroyo was president at the time, Horn said she would have immediately called up Hong Kong leader Donald Tsang to update him on the situation and assure him, “not avoid his calls.”

25-member CA panel completed The House of Representatives has formed its 12-member contingent to the powerful Commission on Appointments (CA). The commission is the body empowered to approve or reject major Cabinet appointments and promotions in the military and diplomatic service. It has 24 members, 12 from the House and 12 from the Senate, with the Senate president as its ex-officio chairman and presiding officer. Representation in the commission is by political party. Elected chairman of the House contingent was Rep. Roilo Golez of Parañaque. By tradition, the head of the contingent is named CA vice chairman. Members of the Golez panel are Antonio del Rosario of Capiz, Rosendo Labadlabad of Zamboanga del Norte, Erineo Maliksi of Cavite, Rex Gatchalian of Valenzuela City, Luis Villafuerte of Camarines Sur, Ferjenel Biron of Iloilo, Antonio Alvarez of Palawan, Rodolfo Antonino of Nueva Ecija, Pedro Romualdo of Camiguin, Simeon Datumanong of Maguindanao, and Rodante Marcoleta of the party-list group Alagad. Golez, Del Rosario, Labadlabad, and Maliksi represent the Liberal Party, while Alvarez, Antonino and Romualdo represent the 2 factions of Lakas that are allied with the LP-led majority coalition.

Lapus, 6 others face probe on noodle scam Former education secretary Jesli Lapus and 6 other officials will undergo preliminary investigation before the Office of the Ombudsman to determine probable cause to charge them with graft in the Sandiganbayan. Lapus and former Bids and Awards Committee (BAC) members are accused of involvement in the allegedly anomalous purchase of instant noodles for public school students in 2007 and 2008. Officials of noodles manufacturer Jeverps Manufacturing Corp. were also named respondents. The contract for the 2007 procurement of the 16,495,718 pieces of 100-gram pack noodles of “Fortified Instant Noodles with Fresh Eggs” amounting to P283,626,515.66 under the “Food For School Program” was awarded to Jeverps. But investigation of the anti-

2 graft agency showed that Jeverps’ license to operate issued on May 21, 1996 was suspended by the Bureau of Food and Drugs on Jan. 24, 2007 for violation of Republic Act 8976, the Food Fortification Law. Investigators found that DepEd did not submit noodle samples to the BFAD for testing and analysis.

ECONOMY & BUSINESS

Growth of 7.9% in 2Q The economy grew by a surprising 7.9% in the second quarter, hitting a 3-year high and raising expectations that full-year growth could exceed targets. The April to June number was higher than the government’s 5.9- 6.9% forecast for the period. First-quarter growth was also revised to a higher 7.8% from the 7.3% reported last May. The latest numbers brought growth to 7.9% for the first half, the strongest performance on a semestral basis since 1988 and above the government’s full-year estimate of 5-6% -- raised from 2.6-2.6% after the January to March result was released. "Given the stronger-than-expected performance of the industry and service sectors and the robust investment growth in the first 2 quarters, it is likely that full year GDP (gross domestic product) growth in 2010 will be leaning towards the upper end of the 5-6% GDP target, perhaps even higher," according to Socioeconomic Planning Secretary Cayetano W. Paderanga.

BIR files P5.5-B tax evasion case vs trader A businessman was charged with tax evasion before the Department of Justice for allegedly using 3 different tax identification numbers (TIN) to defraud the government of some P5.5 billion in taxes. Internal Revenue Commissioner Kim Henares said Macario Gaw Jr. violated the National Internal Revenue Code when he used 3 different TINs in filing his income tax returns in 2007 and 2008. “That shows there was a real intent to mask the activity as capital gains when actually it’s an ordinary asset,” he said. Henares said BIR records show Gaw bought 10 parcels of land in 2007 for P4 billion and sold them for P8 billion, and instead of classifying the sale as an ordinary asset sale, he declared the transaction as capital asset sale and paid lower amount of taxes. “He paid only 6% Capital Gains Tax amounting to P9 million in 2007 and P418 million in 2008 to evade payment of the 32% income tax and 12% VAT due to sale of lands classified as ordinary assets,” she said. Henares said Gaw should have paid P5.5 billion in taxes for the sale of the lots.

Competitiveness still a concern for SMEs Competitive issues continue to hound small and medium enterprises (SMEs) in the Philippines but they are also among the most upbeat in the region, a United Parcel Service (UPS) survey showed. The 2010 Asian Business Monitor survey, conducted from March to April, culled responses among businessmen behind 1,351 SMEs in 13 Asian economies as the logistics firm sought to gauge sentiment and identify barriers to development, UPS Philippines Managing Director Tim K. Gohoc said. SMEs are deemed the backbone of the Philippine economy: according to official data, micro, small and medium enterprises accounted for 99.6% of registered businesses and employed nearly two-thirds of the labor force as of 2008. The Philippines came out at the bottom -- ranked 13th out of 13 economies -- in the UPS survey when respondents were asked to compare SMEs in other countries to their own. The country was also last in 2009 when it ranked 12th out of 12 before Vietnam was included this year.

BSP raises inflation forecast for 2011 The Bangko Sentral ng Pilipinas (BSP) raised its inflation forecast for next year due to the continued stronger- than-expected gross domestic product (GDP) growth in the first half of the year, higher oil prices, petitions for electricity rate hike, the imposition of the 12% value added tax on toll as well as the impending MRT-LRT fare hike. BSP Deputy Governor Diwa Guinigundo said that the central bank decided to raise the inflation forecast next year to 3.25% instead of 3% set last July 15 but has maintained this year’s forecast at 4%. Guinigundo attributed the “very slight” adjustment in next year’s inflation forecast to higher oil prices, stronger-than- expected GDP growth in the first half, and stronger liquidity growth. For 2012, the BSP sees inflation averaging 2.97%. He pointed out that the inflation forecasts for 2010, 2011, and 2012 would fall within the targets set by the BSP as the increase in capital formation would mute or moderate any additional price pressure.

3 toll roads up for bidding in Oct. The Department of Public Works and Highways (DPWH) will bid out in October 3 toll road projects lined up under the public-private partnership (PPP) scheme of the administration. "We’re launching the first set [of PPP projects] in October. Those that are ready [meaning] they already have feasibility studies. As far as DPWH, we’re trying to put together 3 projects [and] those are the expressways,” Public Works Secretary Rogelio L. Singson said. The 3 toll roads are Cavite-Laguna Tollway or CaLa, Central Luzon Expressway from Nueva Ecija to Nueva Vizcaya and Ninoy Aquino International Airport (NAIA) Expressway from NAIA Terminal 3 to Coastal Road. President Benigno Simeon C. Aquino III told a briefing about proposals to create an investment fund with low-interest loans as a pump-priming scheme for PPP.

RP prepares for EU check on aviation safety standards The government and the country’s civil aviation sector are preparing for the visit in October by an official team of the European Union (EU) "to conduct an audit" on progress in improving safety standards and procedures, the chief of the Civil Aviation Authority of the Philippines (CAAP) said. Alfonso G. Cusi, CAAP director general, said that his office has asked the European Aviation Safety Agency (EASA) to provide a detailed agenda for the visit on Oct. 18-22. The outcome of the visit will be discussed and reviewed by EU members in the conference that will be held in Brussels, Belgium. The move was after the announcement by the International Civil Aviation Organization in October last year of a "Significant Safety Concern" relating to poor government oversight of safety in the industry and the earlier downgrading of the Philippines’ safety rating by the U.S. Federal Aviation Administration.

CORPORATE BRIEFS

San Miguel Brewery Inc. (SMB) has retained the PRS Aaa credit rating from Philippine Rating Services Corp. for its outstanding P38.8-billion bond issue...PhilRatings explained that obligations rated PRS Aaa are of the highest quality, with minimal credit risk, as the issuer’s capacity to meet its financial commitment on the obligation is extremely strong...Series A of the bonds, amounting to P13.59 billion, will mature in 2012 while Series B, amounting to P22.4 billion, will mature in 2014. Series C (amounting to P2.81 billion) will mature in 2019...AB Holdings Corp. has further beefed up its stake in high-end leisure developer Landco Pacific Corp. to 81% to capitalize on a vibrant property market...this after AB Holdings acquired an additional 15% block from Metro Pacific Investment Corp.’s shareholdings in Landco...the purchase leaves MPIC with just 19% in Landco...MPIC chairman Manuel V. Pangilinan, however, remains chairman of Landco...Benguet Corp. is hoping to reach an agreement by September this year with St. Augustine Mining (a subsidiary of American firm Russell Mining & Minerals) for the turnover of Benguet’s interest in the Kingking mine in Compostela Valley to the North American mining firm...Russell Mining has been awarded by the National Development Corp. (Nadecor) the contract to operate the Kingking mine.

WORD-FOR-WORD

Manila Times columnist Dan Mariano wrote:

“Legal circles have been arguing whether or not P2 billion was actually paid to the local and foreign lawyers who represented the Philippine government in arbitration proceedings over the construction of NAIA 3.

The funds came from the Manila International Airport Authority (MIAA) from which the private consortium Philippine International Air Terminals Co. (Piatco) tried to collect US$565 million for its construction of the third terminal of Ninoy Aquino International Airport (NAIA).

Members of the local legal community were stunned by the P2-billion figure mentioned in several published accounts. They could not figure out how the cost of the arbitration proceedings before the Singapore-based International Chamber of Commerce (ICC) have turned out to be so prohibitive for the government—and, therefore, the country’s taxpayers.

Informants, however, pointed out that since 2003 the MIAA Board has been releasing funds to the Office of the Solicitor General (OSG). Those disbursements were reflected in several board resolutions.

As of last February, informants added, the funds released to the OSG—then headed by former Justice Secretary Agnes Devanadera—had totaled $46,573,787.60. A letter sent by MIAA General Manager Alfonso Cusi sent to Devanadera mentioned the same eye-popping figure.

At the prevailing exchange rate, that is equivalent to 2,095,820,442 in Philippine pesos.

Last February 4 alone, the MIAA was said to have released $3.5 million to the OSG as partial payment for legal fees in the arbitration proceedings.

A year earlier $2.36 million was withdrawn from MIAA’s bank account in favor of the OSG. A letter to the LandBank dated Feb. 23, 2009 and signed by Cusi and MIAA Senior Assistant General Manager Roberto Uy reportedly confirmed the release of this amount to the OSG.

One of the informants said: “The MIAA management did not even bat an eyelash in paying these staggering amounts, and appears bent on shelling out more money for their lawyers, especially after the Philippine government had trumpeted its victory in the arbitration proceedings.” 4

Further payments to the legal team are reportedly due to be released this month.

Malacañang has claimed, for instance, that the government saved $1.1 billion or roughly P49 billion by winning the arbitration case. Other legal experts, however, said that the Philippine panel won none of the 23 counterclaims it had filed against Piatco.

The legal team that represented the country’s interests in the Singapore proceedings was composed of Filipino and foreign lawyers. It included retired Supreme Court Justice Florentino Feliciano and then-UP law professor Ma. Lourdes Aranal Sereno, who was recently named to the Supreme Court by President Aquino.

The country was initially represented by the OSG, which contracted the services of White and Case. The Washington-based law firm, in turn, hired Florentino and Sereno.

Evidently, the OSG felt it needed the expertise of White and Case, which has a global reputation for successfully handling international arbitration cases for its clients.

Members of the local legal community, however, asked why White and Case still needed Feliciano and Sereno? They also asked how much were Feliciano and Sereno able to get from the P2-billion legal fees.

Presidential Spokesman Edwin Lacierda has told reporters that Mr. Aquino was not personally acquainted with Sereno prior to her appointment to the Supreme Court.

Lacierda reportedly added that Sereno was chosen based because of her “admirable” credentials, particularly her role in the Singapore arbitration as well as earlier proceedings before the World Bank initiated by the German airport builder Fraport.

According to informants, however, Lacierda was misinformed. They claimed to have a document showing that as of 2 years ago Sereno had ceased to be involved in the arbitration proceedings.

A letter sent via fax and e-mail by White and Case to the ICC tribunal members in Singapore on Aug. 28, 2008 stated that Sereno was no longer connected with the Piatco case.

Signed by White and Case partner Carolyn B. Lamm, the letter reportedly said: “Please be advised that Ms. Maria Lourdes Sereno is no longer one of the Respondent’s Representatives as listed in Section 1.3(b) of the Terms of Reference and should not be copied on future correspondence.”

Feliciano and Devanadera were said to have also received copies of the White and Case letter.

If it was only recently that the ICC proceedings ended, members of the legal community questioned what exactly was the role Sereno had played in the so-called victory in Singapore.”