The government has lost its bid to recover some P580 million in excise taxes due from Petron Corp. after the Supreme Court (SC) ruled that the oil giant complied with the procedures laid down for the transfer and use of its tax credit certificates (TCCs) from 1995 to 1997.

In a 23-page decision promulgated last July 28, the SC’s First Division reversed the 2007 ruling of the Court of Tax Appeals (CTA) ordering Petron to pay the Bureau of Internal Revenue (BIR) the amount after declaring its TCCs null and void.

The tax deficiency was incurred after the TCCs Petron had used to pay for its taxes were cancelled by the Department of Finance (DoF) on grounds that they were “fraudulently issued and obtained.”

The CTA ordered Petron to pay P580,236,552 representing deficiency excise taxes for the taxable years 1995 to 1997, consisting of P284.3 million in basic taxes, a 25 percent late payment surcharge and interest of P295.39 million.

But the SC held that “Petron has more than amply proved its good faith by complying with the procedures laid down for the transfer and use” of the nullified TCCs.

It also said the BIR can no longer take back the tax credits it had already approved even if the TCCs were subsequently found to have been fraudulently obtained after witnesses alleging the fraud were not available for cross examination.

The High Court declared that the CTA “reversibly erred” in relying on the affidavits executed by former officers of the companies from where Petron acquired the TCCs.

“Without said erstwhile general managers/officers being presented on the witness stand to affirm the truth and veracity of their statements, the affidavits executed are, however, correctly impugned by (Petron) as hearsay for lack of opportunity to cross examine said affiants,” said in a decision penned by Associate Justice Jose P. Perez.

It added: “Almost always incomplete and often inaccurate, sometimes from partial suggestion, or for want of suggestion and inquiries, the infirmity of affidavits as species of evidence is a matter of judicial experience and are thus considered inferior to the testimony given in open court.

“Unless the affiant is placed on the witness stand to testify thereon, the rule is settled that affidavits are inadmissible as evidence under the hearsay rule.”

The decision was concurred in by Chief Justice Renato C. Corona and Associate Justices Presbitero J. Velasco Jr., Teresita Leonardo De Castro, and Mariano C. Del Castillo.

It was traced that Petron had acquired the TCCs from garment companies owned by Faustino Chingkoe, who is facing more than 80 counts of graft charges along with former officials of the now defunct DoF One-Stop Shop Credit and Drawback Center (the Center) with the Sandiganbayan, in relation to the issuance and use of TCCs.

The companies include Diamond Knitting Corp., Filstar Textile Industrial Corp., Alliance Thread Co., Inc., Fiber Tech Corporation, Jantex Philippines, Inc., and Master Colour System Corp.

The deeds of assignment executed by the firms in connection with the transfer of the TCCs to Petron were approved the Center, a tax credit window composed of representatives from the DoF, Board of Investments, Bureau of Customs and BIR.

The SC said that with the approval of deeds of assignment by the grantees, “the Center unequivocally affirmed not only the validity of the TCCs but also the transfer thereof in favor of Petron to whom it issued the requisite DoF-TDMs (tax debit memos).”

TDMs serve as the official receipt from the BIR evidencing the taxpayer’s payment or satisfaction of his tax obligation.

The Philippines’ flag carrier Saturday cancelled about a dozen domestic and international flights after several pilots resigned for higher-paying jobs with foreign airlines.

Dozens of flights were also delayed for hours due to the lack of pilots, according to Philippine Airlines (PAL).

PAL spokesman Jonathan Gesmundo said the problem affected flights using Airbus A320 planes, which account for 16 of the airline’s 39 operating aircraft.

‘Unfortunately, we have had recent indiscriminate resignations of A320 pilots and we are now faced with inadequate flight deck crew to man A320 aircraft,’ Gesmundo said.

He said the pilots resigned after they were offered better-paying jobs by foreign airlines, which PAL could not match.

Gesmundo said the pilots should have given PAL six months to train their replacements.

‘PAL will soon be filing appropriate charges against those pilots who chose not to report for work immediately after submitting their resignation letters,’ he said.

‘Most of the pilots still owe PAL the cost of their aviation school training, which run into millions of pesos per pilot,’ he added.

Gesmundo said PAL may have to ground its A320s as it would take the airline several months to train new pilots.

He said the carrier was now adjusting its schedules by merging flights or using bigger aircraft to accommodate passengers affected by the cancellations.

Even the country’s only umbrella organization of watchmen and security agencies denied having ever met, much less consulted with, their supposed representative in Congress.

The Philippine Association of Detective and Protection Agency Operations Inc. on Friday said Juan Miguel “Mikey” Arroyo did not consult them when he ran as nominee of Ang Galing Pinoy, a party-list group that supposedly champions the rights of security guards and tricycle drivers.

Ramon Bergado, Padpao president, said he was not aware of Arroyo’s relationship with other members of their group and if the son of former President Gloria Macapagal-Arroyo was supported by security guards as he claimed.

“In my capacity as president of Padpao, I don’t know if he ever talked with our members individually (prior to the May elections),” Bergado told the INQUIRER over the phone.

“All I can say is that officially,” he said, “Padpao members did not campaign for Mikey Arroyo and his group.”

Asked if Arroyo knew him or other Padpao officials, he said: “I have never met Mikey Arroyo in my entire life. I only see him on television.”

According to Bergado, Padpao threw its support behind Diwa party-list group, which won a seat in the country’s first ever automated elections last May 10.

The party-list group had Emmeline Aglipay, daughter of former Philippine National Police chief Edgardo Aglipay, as its first nominee.

Aglipay’s family owns and manages Emeritus and Emirates security agencies, two of the country’s biggest private security companies.

“Padpao supported Diwa through a resolution adopted unanimously by the board of directors and its members,” Bergado maintained.

Composed of nearly 2,000 security agencies and some 410,000 licensed watchmen, Padpao is the only duly-registered group of security guards and security firms created through Republic Act 5487.

Bergado said Padpao was not keen on questioning Arroyo and his group’s accreditation, saying they would rather wait for the decision of the court and the House of Representatives Electoral Tribunal regarding the disqualification cases filed against AGP.

He, however, stressed that party-list nominees should be members of the groups they purportedly represent 90 days before the elections.

“Anybody can claim that they represent a certain group. It’s their right to do so. But do they really represent the interests of the industry?” he noted.

Sought for his opinion on Arroyo’s case, Bergado said: “He has the right to run (as AGP nominee). I cannot question him on that. Whether he was the right person to represent the group, that’s another thing; claiming is another thing.”

“Besides, it’s water under the bridge now. Let’s just wait for the court’s decision on his case,” he said.

On Thursday, tricycle driver Danilo Antisipado petitioned the HRET to disqualify Arroyo, questioning the former Pampanga vice governor and two-term congressman’s eligibility to run as party-list representative.

Former Akbayan party-list Rep. Risa Hontiveros had earlier sought the nullification of Arroyo’s victory for his supposed failure to satisfy documentary requirements as party-list representative.

MANILA, Philippines—Automated elections are here to stay.

This was the pronouncement of Jose Melo, chair of the Commission on Elections (Comelec), after results of a random manual audit of ballots from the May 10 polls showed a 99.6-percent accuracy.

Henrietta de Villa, chair of the Parish Pastoral Council for Responsible Voting (PPCRV), yesterday presented a report on the audit of 1,145 clustered precincts, which declared that the results of the automated elections were accurate.

The report said that none of the presidential, vice presidential, congressional, gubernatorial and mayoral races audited in the selected precincts “failed the accuracy test of 99 percent.”

Melo said he was heartened by the findings, which compared the results of the voting machines with the manual count conducted by auditors.

“It is a very encouraging report. It means that the machines worked 99 percent,” the Comelec chief said.

That losing politicians conceded after preliminary results were known a day after the polls closed was a sign that the automated election system was trustworthy, Melo said.

“Automation is here to stay. As long as we have the money, we will automate,” Melo said.

Critic skeptical

But one of the information technology critics of the Comelec is skeptical of the audit results.

Augusto Lagman said the Comelec request for a proposal from the private sector for an automated election system had mandated that the voting machines have a 99.99-percent accuracy rate.

Lagman said the findings of the random manual audit “do not meet that requirement.”

Discretion

De Villa said the PPCRV could not use the accuracy threshold for the voting machines because the audit was subject to a host of external and human factors.

“The auditors used discretion in reading the votes. The machines did not have that,” she said.

In addition, the National Statistics Office (NSO) determined the allowable margin of variance for the audit, according to De Villa.

Delay questioned

Lagman also questioned the delay in the release of the results. “I’m not happy about it. Why only now? That itself is a failure,” he added.

De Villa said the audit team had several logistical and procedural problems that dragged the audit for several weeks.

The random manual audit only managed to count 1,046 clustered precincts, which translated to about 500,000 votes. De Villa said the remaining precincts were not able to send their results to the Comelec.

There were some 75,000 clustered precincts during the May 10 general elections.

Incomplete

Although the audit was incomplete and took longer than expected, De Villa and Melo said the results were more than enough to establish the integrity of the voting machines.

The automated elections law says that the accuracy rate of the count must be 99 percent, allowing a variance of 1 percent or a difference of 10 votes for every 1,000 valid ballots cast.

Variance refers to the difference in the machine count and in the audit of the results by teacher-auditors enlisted by the Comelec to examine the ballots from the participating precincts.

NSO verification

Counts with a difference of at least 10 votes were sent to the NSO for root-cause verification, which determined the errors. Some errors, officials said, were due to miscounting by the auditors.

NSO representative Florante Varona said the presidential, vice presidential, House, gubernatorial and mayoral races had an accuracy rate of 99.6 percent. “There was a variance of 0.4 percent,” he said.

Varona said the variance was lower than the 1-percent threshold.

The audit report said the variance for the count in the presidential race was 0.49 percent. In the vice presidential race, it was 0.40 percent. The combined variance for the local posts was 0.37 percent.

The audit report also showed certain problems in the counting that has to be raised with the Comelec.

Discrepancies in Manila

The report said there two-digit discrepancies in four precincts, high number of rejected ballots in two precincts, and “large” variances for the Manila mayoral race that was due to a voting-machine error.

“The validation team could not identify the reason for the large variances, especially for the position of mayor, even after the retrieval and opening of the ballot boxes,” the report said.

Upon inspection of the ballot images, it was revealed that there was a vertical line running through the local ballots that was not seen in the paper documents.

Foreign object in scanner

The report said Smartmatic TIM Corp., the supplier of the automated counting machines, told the team that a “foreign object” could have been lodged in the scanner, resulting in inaccurate reading.

When the machines were inspected in the presence of watchers, “a fiber-like substance was found inside the machine. This case appears to be machine, and not procedural, error,” it said.

Atienza protest

Former Manila City Mayor Lito Atienza has filed an electoral protest alleging errors, discrepancies, irregularities and fraud in the results generated by the voting machines in all 1,441 clustered precincts in Manila and their transmittal to the City Board of Canvassers.

Atienza yesterday expressed apprehension and dismay over the delay in the proceedings of his election protest against Mayor Alfredo Lim in light of the large discrepancies the manual audit uncovered in the city’s mayoral race.

Atienza asked the Comelec, where his protest is pending, to expedite the release of the order for the immediate retrieval of the boxes containing the ballots of certain precincts so the revision and recount of the votes could start.

Difference of votes

The audit team said it was up to the Comelec to decide on a handful of cases that it could not explain.

The random manual audit committee said there were a difference of 24 votes in a precinct in Pambujan, Northern Samar; 13 votes in Tuburan, Basilan; 14 votes in Gerona, Tarlac; and 18 votes in Tarlac City, Tarlac.

There were 99 rejected ballots in Lutayan, Sultan Kudarat, and very low valid votes in Maluso, Basilan.

WASHINGTON (AFP) – A founding member of Al-Qaeda-linked Philippine militant group Abu Sayyaf pled guilty Wednesday in a court in Washington to the 1995 kidnap of 16 people, including four US citizens.

Madhatta Haipe, a Philippine citizen who was extradited to the United States in 2009, pled guilty to four counts of hostage taking and faces up to 25 years in prison as part of a plea agreement, the Justice Department said.

Haipe admitted organizing the kidnap of four US citizens, one US permanent resident and 11 Philippine citizens in December 1995 near remote waterfalls on the island of Mindanao in the southern Philippines.

He told the hostages they would be held for ransom, and warned the group, which included six children, that militants would track and kill them if they told anyone about their kidnapping after their release.

Four hostages were released shortly after being kidnapped, and the rest were freed days later after a ransom was paid.

Haipe, 48, was indicted before a US court in 2000, and Philippine authorities extradited him to the United States in August 2009, the Justice Department said.

“For roughly 15 years, FBI agents, Justice Department prosecutors and authorities in the Philippines relentlessly pursued this matter on behalf of the victims, who were held hostage and threatened with death by this Abu Sayyaf leader,” said David Kris, assistant attorney general for national security.

“With today’s guilty plea, Mr. Haipe is finally being held accountable for his actions.”

US Attorney for the District of Columbia Ronald Machen said the case was intended to send “a clear message.”

“We will never tire in our pursuit of justice for those who seek to harm American citizens, whether at home or abroad,” he said. “Today’s guilty plea demonstrates that there will be serious consequences for those who commit such crimes.”

Haipe is scheduled to be sentenced on December 14, and faces up to 25 years in prison as part of a plea agreement.

Abu-Sayyaf, a US-designated terror organization, was founded in the 1990s with seed money from Osama bin Laden’s Al Qaeda-network to fight for an independent Muslim state in the south of the mainly Catholic nation, Philippine military intelligence officials say.

The militants often resort to kidnappings, mainly targeting foreigners and Christians, to raise funds from ransoms. Failure to pay ransoms often results in the beheading of the hostages.

The group is also capable of much bigger strikes, such as the bombing of a ferry in Manila Bay in 2004 that claimed more than 100 lives and was the nation’s worst terrorist attack.

LJUBLJANA, Slovenia – A cyberscam mastermind from Slovenia who is suspected of creating a malicious software code that infected 12 million computers worldwide and orchestrating other huge cyberscams has been arrested and questioned, police said Wednesday.

Leon Keder, a spokesman for the Slovenian police, did not identify the suspect. Keder told The Associated Press the man was released after police made sure that he could not tamper with evidence or leave Slovenia, but offered no details pending an investigation.

The FBI told The AP in Washington that a 23-year old Slovene known as Iserdo was picked up in Maribor in northwestern Slovenia 10 days ago, after lengthy investigation by Slovenian police, FBI and Spanish authorities.

His arrest comes about five months after Spanish police broke up the massive cyberscam, arresting three of the alleged ringleaders who operated the Mariposa botnet, which stole credit cards and online banking credentials. The botnet — a network of infected computers — appeared in December 2008 and infected hundreds of companies and at least 40 major banks.

Botnets are networks of PCs that have been infected by a virus, remotely hijacked from their owners, often without their owners’ knowledge, and put into the control of criminals.

“In the last two years, the software used to create the Mariposa botnet was sold to hundreds of other criminals, making it one of the most notorious in the world,” said FBI Director Robert Mueller in a statement. “These cyber intrusions, thefts, and frauds undermine the integrity of the Internet and the businesses that rely on it; they also threaten the privacy and pocketbooks of all who use the Internet.”

The Mariposa botnet, which has been dismantled, was easily one of the world’s biggest. It spread to more than 190 countries, according to the researchers who helped take it down after examining it in the spring of 2009.

Jeffrey Troy, the FBI’s deputy assistant director for the cyber division, said Iserdo’s arrest was a major break in the investigation.

On Wednesday, the FBI also identified, for the first time, the three individuals arrested in connection with the case in Spain: Florencio Carro Ruiz, known as “Netkairo;” Jonathan Pazos Rivera, known as “Jonyloleante;” and Juan Jose Bellido Rios, known as “Ostiator.

They are being prosecuted for computer crimes. Officials said the Mariposa botnet from Spain was the largest and most notorious.

In Ljubljana, Keder said “other suspects” were detained and interrogated along with the chief suspect, but offered no further details until a news conference planned for Friday.

Slovenian media have linked three former students of the Maribor Faculty of Computing and IT to the case, reporting that they were recently detained and interrogated by police and FBI officials, who confiscated their computer equipment.

The FBI’s Troy said more arrests are expected and are likely to extend beyond Spain and Slovenia, targeting additional operators who allegedly bought the malware from Iserdo.

Mariposa is the Spanish word for “butterfly.” Iserdo, read backwards, means “salvation” in Slovenian.—AP

Former Marine Col. Ariel Querubin walked free from his detention cell Wednesday, more than four years after he was arrested in connection with a failed attempt to overthrow the administration of former President Gloria Macapagal-Arroyo.

Querubin was freed after Armed Forces of the Philippines Chief of Staff Lt. Gen. Ricardo David signed the detained official’s provisional release papers Tuesday night.

GMA News reported that Querubin walked out of his cell at noon to the warm welcome of his family and supporters.

In an interview with reporters at Camp Aguinaldo, Querubin said he did not request for his release from detention.

“Let’s be clear about it, this is not my initiative. Initiative ito ng AFP,” said Querubin, who is facing trial before a military tribunal for a charge of mutiny following his group’s alleged plot to march and subsequently withdraw their support from then President Arroyo in February 2006.

“Right after ni-release si Danny [Lim] nung June 1, kinabukasan pumunta si Gen. Ordoñez. Nag-offer na ire-release ako provided I will write the chief of staff. But I declined,” Querubin said.

He will be placed under the custody of Brig. Gen. Reynaldo Ordoñez, head of the AFP’s Defense Reform Office.

Former Scout Ranger chief Brig. Gen. Danilo Lim, another leader in the foiled plot against Arroyo, was also placed under the custody of Ordoñez upon his release last May 31 by then AFP chief Gen. Delfin Bangit. More than a week later, Bangit also gave provisional liberty to nine Scout Ranger officers linked to the plot.

Querubin said he insisted that he would wait until his motion to dismiss their case would be resolved so the officers accused in the alleged 2006 coup attempt could move on with their lives.

He asserted that the officers are not guilty of any crime so he did not file a request for his release. “Yun na lang naiwan sa akin, yung dignity ko at pride, ayaw kong sumulat,” he said.

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AFTER nine years of selling its power plants to settle debts, it’s back to square one for National Power Corp. (Napocor), as the current liabilities of the state-owned company remained as they were in 2001.

[Photo shows a protester taking part in a rally against power rate increases last March. PHOTO BY RENE H. DILAN]

Photo shows a protester taking part in a rally against power rate increases last March. PHOTO BY RENE H. DILAN
In a press conference, Department of Energy (DOE) Secretary Jose Rene Almendras told reporters that Napocor’s financial obligations at end-2009 stood at almost the same level as in 2001, when the company’s debts hit $16 billion, making it the single biggest drag on the finances of the national government.

Almendras said this was despite the sale of nearly all of Napocor’s assets, the proceeds of which were supposed to retire its debts.

The DOE chief however said that the company’s stagnant finances were not because of the sale “ of Napocor assets at a loss.”

Taking his cue from President Aquino’s State of the Nation Address (SONA), Almendras blamed the previous administration’s decision to subsidize the cost of power.

“It was on the price of energy Napocor has made to the market. What the President said [was that] your generation cost was at P10 per kilowatt-hour and yet you’re selling only at P2 per kilowatt-hour,” the DOE chief said.

In his first SONA, the President on Monday scored Napocor’s subsidies from 2001 to 2003, which saddled the government with more debt even as the privatization of its power plants had barely begun.

Mr. Aquino said Napocor’s subsidies were timed before the national elections of 2004, during which then President Arroyo secured a fresh six-year mandate.

As a result of Napocor’s subsidies, Almendras said that future generations of Filipinos would have to pay for the past administration’s inefficiencies through their electricity bills.

Under the Electric Power Industry Reform Act of 2001, proceeds from the sale of Napocor’s assets should be used to pay the company’s. Any remaining amount will be shouldered by consumers under the universal charge component of their electricity bills.

Boardroom perks
The DOE chief said the department is also looking into the boardroom perks of its attached agencies and corporations, after Mr. Aquino’s expose on the incentives that the executives of state-run Metropolitan Waterworks and Sewerage System (MWSS) awarded themselves.

Almendras said he already ordered the accounting of bonuses and other benefits.

”The President wanted to set an example by discussing the MWSS situation. But the instructions of the President are very clear, which is review all attached agencies of the DOE. I have been doing that even before the SONA, it’s just that the numbers of MWSS are much nicer,” Almendras said, adding that his department’s units don’t enjoy benefits that stretch to 30 months’ worth of salaries.

“It’s not that high and we’re not going to absolve anyone as we are reviewing it,” he said.

While granting board members certain financial perks is hardly illegal, ethical questions remain on such practices, he said.

Besides Napocor, other DOE’s attached agencies are the Power Sector Assets and Liabilities Management Corp., Philippine National Oil Co. and the National Electrification Administration.

SACRAMENTO - Governor Arnold Schwarzenegger has nominated Tani Gorre Cantil-Sakauye as the next Chief Justice of California. If elected, Cantil-Sakauye would be the first Asian and Filipino American Chief Justice of the state.

She would be replacing Chief Justice Ronald M. George, who is retiring in January.

The California governor recently appointed Cantil-Sakauye to head a Judicial Council committee charged with overseeing the operations of the Administrative Office of the Courts, which runs the court system.

Cantil-Sakauye has been a 3rd District Court of Appeals Judge since 2005. She previously worked as a trial court judge for 14 years in Sacramento. She also worked as deputy legislative secretary for former Governor George Deukmejian.

According to several biographies, the 50-year-old Cantil-Sakauye came from a modest background. Her Filipina mother was a farm worker and her Filipino