No. 113 - 17 February 2006

Malacañang Palace is shuffling its pieces on the political chessboard in what looks like a move to shore up political support and prepare for either a Cha-cha or election. On 6 February, Antipolo congressman Ronaldo Puno took over the Department of Interior and Local Government after Sec. Angelo Reyes was moved to the Department of Environment and Natural Resources. Puno was a campaign strategist for President Arroyo in the 2004 election and appeared to play a key backroom crisis management role when the Hyatt 10 stepped down. Former DENR Secretary Michael Defensor was named Presidential Chief of Staff to create the openings for Reyes and Puno.

Another anti-impeachment ally, Camarines Sur congressman and House Appropriations Committee chairman Rolando Andaya Jr. was named Budget secretary replacing Romulo Neri, who returned to his former post as NEDA director-general. Former Western Samar representative Eduardo Antonio Nachura, the official spokesman for the President in her impeachment case, was named chief legal counsel replacing Merceditas Gutierrez, who was transferred to the Office of the Ombudsman.

Meanwhile, Malacañang also announced the appointment of new Social Welfare secretary Dr. Esperanza Cabral, a former director of the Philippine Heart Center, and Edgardo Pamintuan as chairman of the Subic-Clark Development Area Council.

Earlier this year, there were also some key changes in the military. Southern Command chief Gen. Edilberto Adan retired on 11 January and was replaced by Maj. Gen. Gabriel Habacon of the 1st Infantry Division based in Pagadian City. Rear Admiral Tirso Danga was given the Western Command in place of Vice Admiral Ruben Domingo who retired on 14 February. Habacon is mentioned in the “Hello Garci” tapes while Danga was Intelligence chief at the time the tapes were allegedly made. Other names mentioned in the tapes were Lt. Gen. Hermogenes Esperon, retired Lt. Gen. Roy Kyamko, and retired Brig. Gen. Francisco Gudani. Meanwhile, AFP deputy chief of staff Lt. Gen. Samuel Bagasin for the Central Command replaced vice Lt. Gen. Emmanuel Teodosio who retired on 21 January.

Rent Control Act Amendments

The Rent Control Act (RA 9341) remains in force following its recent extension. RA 9341 is an extension with some amendments of RA 9161 (Rental Reform Act) signed by President Arroyo in 2001, which expired on 31 December 2004. RA 9341 was signed into law on 21 December 2005 and will be effective until 31 December 2008.

Rent control remains in effect for residential units with total monthly rent not exceeding P10,000 for each unit in Metro Manila and other highly urbanized cities, and not exceeding P5,000 in all other areas. The allowable annual increase in rent remains at 10% for the unit occupied by the same lessee.

According to the NSO Census of Population and Housing report in 2000, there were about 1.54 million rental units in the country with 687,048 of these in Manila. About 600,000 units in Manila have monthly rents below P10,000.

Special Purpose Vehicle Extension

On 14 December 2005, the House approved on third reading House Bill 4066 which amends the Special Purpose Vehicle Act (RA 9182). The bill extends the deadline for another 18 months the SEC registration of special purpose vehicles (SPV) to avail of tax exemptions and fee privileges. It also gives a two-year period to transfer non-performing assets with tax incentives and broadens coverage to include NPAs as of 31 December 2004.

SPVs are stock corporations set up to acquire nonperforming assets of banks and other financial institutions at a reduced rate. This allows banks to have more funds for lending. It also encourages private sector investments and rehabilitates distressed businesses.

As of end-2005, only P103 billion in bad assets have been disposed through SPVs. The nonperforming loan ratio reached a rate of 9.6% in end-October 2005 from a high of 18.8% in October 2001. As a counterpart of HB 4066, Senators Edgardo Angara and Ralph Recto introduced SB 2204 on 17 January 2006. It is now pending second reading in the Senate.

Based on the priority bills targeted by LEDAC, at least three had been enacted into law to help sustain economic stability. But the other measures are expected to remain pending as Congress focuses on hearing the 2006 Budget and the proposals to amend the Constitution.