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FROM ASIALAW PROFILE: Philippines

The Philippines' economy has historically been characterized by boom and bust cycles. The previous regime used an
aggressive policy of reform in an effort to modernize the economic system and make the country more international
and market-oriented. The current Philippine government however, has focused more on the internal issues of reducing
poverty and the needs of the masses and as such, is relying heavily on private sector investments, both domestic and
foreign, to achieve and sustain higher economic growth. The overall recovery of the economy in 2000 has been
generally steady, but weak. The country had hoped to be in a position where it was poised to make a leap into the
rapidly emerging Asian markets. However, there are signs that this optimism may be misplaced and the economy
appears to re-entering a new phase of crisis.
Philippine Politics and Economy
This downturn relates to some of the post-1997 crisis malaise that is re-appearing in some Asian countries. But for the
most part, the Philippines' problems are due to internal factors unique to the country itself. Some foreign analysts and
local attorneys have ascribed the problem to a crisis of leadership where the Estrada government's lack of experience
and transparency has undermined the momentum developed by the previous government. The need for
implementation of a precise agenda, the lack of resources (due to an inability to collect taxes) and Estrada's falling
credibility have all contributed to the loss of confidence that has foreign investors leaving the country at a rapid rate.
Moreover, the continuous escalating conflict in Mindanao has added to the fear that this barely contained political
fireball will spread to the rest of the provinces, causing further unrest.

The decline in investment hastened also by the weakening of the Peso has prompted one economic analyst to worry
about the phenomenon of imported inflation, where the decrease of production capacity will accelerate inflation. The
result would likely tempt the government into borrowing funds and increasing the country's debt load, further derailing
economic recovery.

Although the government has recently adopted an excellent strategy for recovery, there are still elements in its policy
that will likely exacerbate the long-term problem of poor governance. These omissions include the lack of a monitoring
system for implementation of civil policies and the unrestricted use of powers both by the executive and the judiciary. In
addition, fears about a return to the crony capitalism that has long dominated Philippines business practice remain.
The most recent World Competitiveness Report bodes ill in this respect. The country remains perennially in the
unfavourable end of the spectrum in its assessment of favouritism to, and irregular business practices of, well-
connected organizations. Without addressing these issues, many of the government's well-intentioned plans will be
undermined and it is foreseeable that under these current conditions, investor confidence and restoration of capital
inflows will be further delayed.

Significant Changes in Legislation


In an effort to attract foreign investment interests, several legislative reforms have been implemented to increase
corporate transparency, widen investment interests and prepare the country for the new economy market. The
enactment of laws in the fields of securities, e-commerce, retail trade and energy are all significant developments in
the Philippines in recent months.

Republic Act No. 8799, otherwise known as the Securities Regulation Code, took effect on August 10 2000. As a
consequence of the BW Resources scandal where an acquaintance of President Estrada was accused of market
manipulation, the government enacted this stringent securities regulation to deflect future situations of this kind. The
law now prohibits a securities broker from holding a concurrent position as a dealer, thus preventing an individual from
acting on his own behalf or that of others in their securities accounts. However, more importantly, this new legislation
also changes the rules with respect to inter-corporate disputes. The quasi-judicial powers of the Securities Exchange
Commission are now removed and future corporate litigations must be argued before the regular courts. These
dramatic measures have caused an uproar among the securities sector, prompting the government to delay the
implementation of the legislation until the end of the year in order to accommodate a smoother transition into the new
system.

Republic Act No. 8792, otherwise known as the E-commerce Act, took effect on June 19 2000. The Philippines is the
third such country in Asia to have enacted an e-commerce statute, the first two countries being Singapore and
Malaysia. The E-commerce Act covers both commercial and non-commercial transactions and it gives legal recognition
to electronic data messages and electronic documents. Many legal practitioners have also indicated that the E-
commerce Act is more of a law of evidence because it legitimizes the use of electronic signatures, which have now
become admissible as evidence in judicial proceedings. Furthermore, the law recognizes computer-related crimes and
mandates government computerization. As in other Asian jurisdictions, e-commerce is largely uncharted territory and in
the Philippines, the E-commerce Act is a new and untested law. Even so, its deficiencies are being criticized; e.g., its
failure to address the issue of jurisdiction, the fact that some of its provisions conflict with existing laws, and the
ambiguity of its provisions. Nonetheless, the enactment of the law has made the Philippines among the first for e-
commerce law in Asia and its enforcement and its interpretation by the judiciary are anticipated.

Republic Act No. 8762 or the Retail Trade Liberalization Act of 2000 took effect on March 25 2000 and repealed the old
retail trade law (Republic Act No. 1180), which generally restricted the right to engage in retail trade in the Philippines
to Philippine citizens and corporations that were 100% Philippine-owned. Under the new Act, foreign nationals and
foreign corporations are now permitted to invest or engage in the Philippine retail trade business, subject to certain
minimum capitalization and other requirements for the protection of small Philippine retailers. The Act generally permits
a foreign corporation to engage and invest in retail trade in the Philippines in either of two modes: (i) by organizing an
entity under Philippine law which will engage in the retail trade business in the Philippines; and (ii) by acquiring shares
in existing corporations engaged in retail trade, where the net worth of the domestic corporation is in excess of US$ 2.5
million.

There is another important bill on the government agenda which emphasizes the need for the deregulation and
privatization of the energy industry. The subject is still currently under discussion with a government-led conference
committee of legal specialists. The proposed law generally aims to provide for the total electrification of the Philippines
and hopes to encourage competitive and reasonable prices for electricity by means of the privatization, deregulation
and reform of the energy industry. These proposals include the government-owned National Power Corporation.
Privatization of the industry to ensure the widest possible ownership base and the law's enactment would be a
breakthrough in the state regulated electric power industry.

Legal Marketplace
There are a large number of indigenous law firms in the Philippines that purport to have an expertise in effectively
servicing international clients. However, only a few of these firms enjoy a solid reputation for servicing inbound
investment. Foremost among these are four firms - with Abello Concepcion Regala & Cruz (ACCRALAW); Castillo
Laman Tan Pantaleon & San Jose and Romulo, Mabanta, Buenaventura, Sayoc & de los Angeles joining traditionally
pre-eminent firm SyCip Salazar Hernandez & Gatmaitan in the top tier.

Abello Concepcion Regala & Cruz (ACCRALAW) carries a strong reputation amongst legal practitioners familiar with
the country, and has changed its name to reflect the appointment of founding partner Edgardo J Angara to President
Estrada's cabinet as Secretary of Agriculture in late May 1999. The firm acts for many foreign banks, including Citibank
NA, HSBC, and Deutsche Bank AG, and comes recommended by Dewey Ballantine, among others. While lawyers
familiar with the local market cite a number of firms they would use to smooth through the "political" aspects of a deal,
ACCRALAW was highly regarded as one that they would use for the substantive legal aspects as well. ACCRALAW
attorneys are well aware of their connections to the government and the perceived favouritism that follows, but as one
lawyer clearly states: "Despite the rise and fall of the various administrations in recent years, the law firm is still
recruited for its legal expertise".

Castillo Laman Tan Pantaleon & San Jose is also a prominent player, and the firm boasts the fact that in having a
smaller number of fee-earners than the other major firms, it services its clients more expediently. Judging by the
degree of respect and positive endorsements the firm enjoys, including accolades from White & Case, this is not idle
praise. The firm was the only listed Philippines firm among those nominated in this year's International Financial Law
Review's ("IFLR") Deals of the Year awards.

Romulo, Mabanta, Buenaventura, Sayoc & de los Angeles is largely focused on its foreign clientele and is the only
Filipino firm with an office in Hong Kong. It garnered commendations in past IFLR awards ceremonies.

SyCip Salazar Hernandez & Gatmaitan is the largest firm in the Philippines with offices in Manila, Cebu City and
Davao City. During our research, the firm was often cited as the perennial leader of top-tier firms. It is widely
recommended for its expertise in acting on trans-national deals and for its influence at the highest levels. Ashurst
Morris Crisp and Dewey Ballantine have worked with the firm on past projects.

Among other respected firms, Picazo Buyco Tan Fider & Santos enjoys a good reputation in some areas of expertise,
and has one of the largest practices with 47 lawyers. It is known for its banking and corporate finance specialties, and
its work for a diverse Japanese clientele. In addition, Baker & McKenzie affiliate Quisumbing Torres is active in
servicing inbound investment and is a large practice with over 50 partners and associates. The office also enjoys an
exceptional reputation for its labour, environment and natural resources practice groups.

Local Connections
The sense of importance accorded political connections in the Philippines, even for those firms that boast of expertise
in substantive areas of law, cannot be underestimated. Even the established and well-regarded firms make no secret
of the fact that their name partners are well-connected. For instance, ACCRALAW acknowledges that several of its
founding partners have a prominent place in Filipino political life. In addition to Secretary of Agriculture Angara, another
lawyer who helped pioneer the firm and headed its Labor Practice Group, Franklin Drillon, is Majority Floor Leader in
the Senate and has held numerous cabinet posts, including that of Secretary for Justice and Labor in the Aquino
administration. Furthermore, Ponce Enrile Reyes & Manalastas (PECABAR) boasts that its principal namesake,
Senator Juan Ponce Enrile, is Chairman of the Senate's Government Corporations Committee. Other firms with
prominent alumni include Roco Bunag Kapunan & Migallos, whose name partner Senator Raul S Roco is a prominent
opposition politician and in the recent election, the senator was also a candidate for the presidency. Puno and Puno
Law Offices is also known to be very well connected, with its senior name partner having been Minister of Justice in
1984. Currently its junior name partner is also making a political impact. Roderico Puno holds the position of
Presidential Press Secretary.

There are a number of other well-placed firms that are a testament to the observation that even though connections
can be essential to a firm's growth, once a critical mass is achieved and a reputation established, these same firms
can afford to be politically neutral. Carpio Villaraza & Cruz was known to have members of the firm working on the
election campaign of the sitting vice-president. Recently, Theodoro Pison from Quasha Ancheta Pea & Nolasco was
recruited for the position of under-secretary of Natural Resources and Environment for Legal Affairs. Belo Gozon Parel
Asuncion & Lucila also has immediate access, reflected in the departure of founding partner Magdangal Elma in
November 1998. The Estrada administration appointed Elma as Chief Presidential Legal Counsel and Chair of the
Presidential Committee on Good Government, charged with investigating the alleged Marcos fortune. Experience in
the judiciary's highest ranks is also a boon to the reputation of any firm. Quiason Makalintal Barot Torres & Ibarra has
two retired Supreme Court justices in its name ranks. Former Chief Justice and Solicitor-General Querube Makalintal
is an Of Counsel with the firm, while former Associate Justice Camilo Quiason remains with the firm as a consultant
since retiring from the highest court in 1995.

While the largest firms in the Philippines tend to enjoy the best overall reputation, size does not account for everything
when it comes to retaining the most effective legal counsel in the Philippines. As such, it should be noted that several
prominent mid-size firms were quite reticent about exploring issues of expansion.

International Firms
There are a number of significant international firms that have a Philippines component to their pan-Asian work,
although under the existing regulatory framework they are impeded from formally establishing a presence. Due to the
Philippines' strong dependence on Japanese and American investment, and on those countries as principal export
trading partners, American firms tend to be the most active of the offshore law firms.

For example, Skadden, Arps, Slate, Meagher & Flom and Shearman & Sterling, and two Philippine firms, Puno & Puno
Law Offices and Castillo, Laman, Tan, Pantaleon & San Jose, lawyered the recent US$375 million non-recourse
project financing of the San Lorenzo power project to be located in Santa Rita, Batangas. Shearman & Sterling acted
as international counsel to the lenders. Puno & Puno Law Offices and Castillo, Laman, Tan, Pantaleon & San Jose
acted as Philippine counsel to the sponsor and lenders, respectively. This transaction represented one of the first and
largest greenfield independent power projects to be successfully developed and financed in southeast Asia since the
onset of the regional economic crisis in 1997. The US$77 million GKA term loan also represented the first time that the
GKA insurance programme has been used for an Asian power project since 1997. Additionally, the US$115 million
ECGD term loan represented the largest amount ever insured by ECGD for any power project under the Overseas
Investment Insurance ("OII") programme, and the first time that ECGD had entered into an OII agreement with a
syndicate of commercial banks.

As well, Milbank, Tweed, Hadley & McCloy has built a solid reputation in the Philippines for its project finance work and
for its US capital markets expertise. It has represented many private companies and state-owned enterprises in their
international debt offerings. Although project finance appears to be less active than in the previous year, Milbank,
Tweed, Hadley & McCloy continues to be active in the Philippines with the Ilijan and the San Roque projects. Morrison
& Foerster's Tokyo office also participated in the Ilijan project, representing the Japan Export-Import Bank in its
financing stake of the project. Denton Wilde Sapte continues to advise the NAPOCOR - with which it is active on a
number of other power developments.

White & Case has been recognized annually for work on power project financings in the Philippines. White & Case
represented the lender in the Hopewell Pagbilao project, one of the first real limited-recourse power project financings
in the country. Other power projects include representing the Asian Development Bank in the BOOT project financing
of a oil-fired power plant in Batangas. The firm also represented the US Eximbank in the coal-fired power plant in
Quezon province. Lastly, White & Case represented the project company in the hydroelectric power project in Banguet
Province. In other corporate work, White & Case represented two institutional investors from the AIG Group in
connection with the private placement of convertible redeemable preferred stock of Bayan Telecommunications
Holdings Corporation. Further transactions this year involve representing a consortium in connection with its bid for the
Metropolitan Waterworks and Sewage Systems; acting for Saudi Armaco on the acquisition of 40% of the shares of
Petron Corporation (the formerly state-owned oil company); and advising Baring Brothers in its capacity as lead
underwriter in connection with the second stage of the Petron privatization.

AREA OF EXPERTISE

Corporate and Commercial (Including M&A)


Restructuring work continues to be the greatest source of corporate law work at the moment in the Philippines. Debt
agreement workouts on behalf of ailing companies or their bank creditors have kept lawyers busy. However project
finance activities are on the rise again. Litigation is not yet the principal means chosen to address the widespread
failure to repay loans, as lenders wish to maintain their preferred status in lieu of engaging the SEC-administered
insolvency process. Examples of this type of work include the Philipino Telephone Corporation (PilTel), and Philippines
Telegraph & Telephone (PT&T) restructuring processes in 1999, in which Carpio Villaraza & Cruz represented foreign
banking consortiums that were amenable to restructuring these companies' debts in lieu of foreclosing on them. The
PilTel work continued throughout this past year with Clifford Chance and Allen & Overy working as international
counsel. Subsequent to the success of this restructuring work, Carpio Villaraza & Cruz is also assisting NTT Docomo
on its proposed acquisition of a stake in Philippine Long Distance Telephone (PLDT). In other work, Carpio Villaraza &
Cruz is representing Nissho-Iwai in its acquisition of equitable interests in a Philippines manufacturing company.
Furthermore, the firm is currently counsel to CEMEX and has serviced the company's interest in acquiring several
cement companies including APO-Cement Corporation, Rizal Cement Corporation and Solid Cement Corporation.
SyCip Salazar Hernandez & Gatmaitan, which received the greatest number of favourable impressions from its peers
in our survey of the legal market, was also very active in this regard and worked on behalf of Smart Telecom and
Nippon Telephone & Telegraph in the former company's merger with PLDT. The firm also acted for Universal Food
Corporation in the H.J. Heinz buy-in where White & Case and ACCRALAW were international and local counsel to the
purchaser.

Also among the top-tier corporate and commercial firms, ACCRALAW was involved in several major M&A transactions
this year. The firm conducted due diligence for S.A. Cimenteries CBR in their acquisition of several Philippine cement
manufacturers including Titan Cement Manufacturing Corporation, and Grand Cement Manufacturing Corporation. In
other work in this sector, the firm also worked with Cleary, Gottlieb, Steen, & Hamilton in conducting due diligence for
an international consortium financing Cemex's expansion into the Philippines and Indonesia. ACCRALAW also acted
for Union Fenosa Acex in connection with several of its acquisition interests such as: the acquisition of shares in First
Generation Holdings Inc.; the acquisition of shares in SFELAPCO; and the acquisition of shares in Visayan Electric Co.
Inc.

Among the mid-sized firms, Roco Bunag Kapunan & Migallos has a dominant corporate and commercial practice and
has been involved in several cross-sector transactions. The firms represented Mrs. Lewis of the Beatrice Group in her
bid for the acquisition of Philippine National Bank; the Philippine Deposit Insurance Corporation in its claim for work in
the Urban Bank currently under receivership, and the Felix Mining Corporation with Monorco Group in a joint venture
to explore several mining claims. For their part, Quasha Ancheta Pea & Nolasco has also experienced a great deal of
interesting work. The firm acted for several insurance-related transactions in this past year, representing the Philippine
interests of Sun Life Financial Insurance Canada's worldwide de-mutualization. The firm worked for Queensland
Brisbane Equity in the establishment of their Philippines insurance subsidiary. Quasha Ancheta Pea & Nolasco is very
diverse in its other forms of work and in the past year it acted for Hormel following the consolidation of the meat and
poultry industries and has recently accepted the mandate to represent the publicly listed university, Centro Escolar
University in its operational work. The firm of Platon Martinez Flores San Pedro & Leao also receives substantial
praise from its peers. It is currently acting for Dole Philippines, Inc. in their proposed joint venture with National
Development Company (NDC). The project will be partly financed under the government's ERAP Agri-Agra Food
Security Program currently undertaken by the NDC. In other work, Platon Martinez Flores San Pedro & Leao acts as
counsel for a large US multinational corporation in connection with the negotiations for the purchase of Metrovet, Inc.,
a wholly owned subsidiary of Metro Pacific Corporation. Other firms doing interesting work include Ortega, Del Castillo,
Bacorro Odulio, Calma & Carbonell, who continue to represent Amkor-Anam Semiconductor, the largest
semiconductor manufacturer, in its Philippines interest. Belo Gozon Parel Asuncion & Lucila handled the corporate
representation of Unicapital Inc, Ubi-Philippines and RBN-9. Lastly, Quiason Makalintal Barot Torres & Ibarra continues
to advise Sky Cable in their general legal affairs in corporate and regulatory transactions.
Taxation
Corporate taxation issues have been affected by changes to the Philippines Bureau of Internal Revenue ("BIR")
regulations. Transfer pricing arrangements and tax avoidance schemes will be reviewed more closely. There will be an
enhanced effort to identify tax avoidance schemes so that the bureau can prescribe the necessary measures to avoid
the erosion of revenues. There is no legislation specifically addressing the issue of transfer pricing. However, the BIR
under the National Internal Revenue Code of 1997 has broad discretionary powers to determine the true tax liability of
a taxpayer. It has prescribed audit guidelines to address the proper allocation of income and expenses to Philippine
branches of multinational companies. The audit guidelines provide that sales made by the home office to local buyers,
through the solicitation of the Philippine branch, will be treated as sales constructively consummated by the Philippine
branch. Consequently, the Philippine branch must report the income from such sales as part of its income subject to
Philippine tax. The wide discretionary powers given to the BIR regulators has raised concerns and accentuated the
need to structure transactions delicately between international companies and their local affiliates. Senior partner Nilo
Pea of Quasha Ancheta Pea & Nolasco noted that tax reforms have had a serious impact, and more firms seem to
be dedicating expertise and resources to their corporate tax departments. This is an indication that many of the actions
of the regulators have resulted in the companies' increased willingness to contest their tax assessment. As such, the
government has a difficulty in procuring much needed tax monies for its more aggressive policies. This is exemplified
by the recent work by Quiason Makalintal Barot Torres & Ibarra in its successful representation of ABS-CBN in the
Supreme Court, in which partners of the firm were able to obtain a favourable ruling dismissing the government tax
assessment. The firm also boasts of a client base which includes the Yulo Family Corporate interests, Yuchengco
Group, Mercury Drug Corp., House of Investments and First Gas holdings Inc. Platon Martinez Flores San Pedro &
Leao is also involved in the investigation of a major tobacco company whom the BIR claims has not payed an excise
tax of US$ 22 million. Romulo, Mabanta, Buenaventura, Sayoc & de los Angeles is also a recognized tax specialist,
while Quasha Ancheta; Carpio Villaraza & Cruz; Castillo Laman Tan Pantaleon & San Jose and many other firms also
have dedicated tax departments.

Banking and Finance


Activity in the area of banking law slowed in the previous year and continues to be sluggish at the time of publication.
In a similar manner, securities work has been sporadic due to the rarity of new IPOs. Nevertheless, the Estrada
administration has undertaken efforts to stimulate participation by private enterprises in the development of the
domestic capital market by transferring the SEC from the Department of Finance to the Office of the President in
January 1999. Furthermore, the government's effort to introduce transparency and corporate governance through the
new Securities Regulations Code is an indication of its interests in stimulating this sector.

The legal market in these areas of expertise is largely confined to four prominent firms. One lawyer who works in a firm
outside of this exclusive clique candidly observed that no other firms are doing serious undertakings, as there is a
perception that they may not have the credibility to get the job done. Of the four, SyCip Salazar Hernandez &
Gatmaitan garnered the widest degree of recommendations during the course of our research. Sycip Salazar
Hernandez & Gatmaitan continues to represent several international financial institutions in their Philippines interests.
The firm's clients include ABN-AMRO, and Chase Manhattan Bank. Romulo, Mabanta, Buenaventura, Sayoc & de los
Angeles, Castillo Laman Tan Pantaleon & San Jose and ACCRALAW did not lag far behind, with the latter claiming to
be the retained counsel for most of the largest domestic and foreign banks operating in the Philippines, including
Citibank NA, HSBC and Deutsche Bank. Deutsche Bank was among several foreign banks that senior partner Eusebio
Tan and his team assisted in obtaining their full banking licence in light of the recent liberalization of the bank
operations laws. Outside of the top four, Carpio Villaraza & Cruz also continues to represent Chase Manhattan, ANZ,
Westpac Banking, Standard Charter Bank, DaoHeng Bank and ING Bank. The firm is also assisting Jupiter Asset
Management Ltd., in connection with their property investments in the country. Finally, Picazo Buyco Tan Fider &
Santos was well recognized for its banking law expertise, and claims Citibank and MetroBank among its clients.
Siguion Reyna Montecillo & Ongsiako is retained counsel for HSBC and has acted for other banks in the Philippines.
In other finance related transactions, Quiason Makalintal Barot Torres & Ibarra continues to represent Manila Electric
Company and Maynilad Inc. for their syndicated loans work.

In terms of firms with widely acknowledged practices in the area of securities and capital markets law, Romulo,
Mabanta, Buenaventura, Sayoc & de los Angeles and SyCip Salazar Hernandez & Gatmaitan garnered the most
respect. These firms in particular attracted the praise of lawyers at Milbank, Tweed, Hadley & McCloy, that have
themselves been active in servicing similiar needs of international clients along with Davis Polk & Wardwell and
Linklaters.

A number of other firms have experience in this area. These include Castillo Laman Tan Pantaleon & San Jose where
Roberto San Jose is a securities law specialist. ACCRALAW also receives positive endorsements. Its name partner
Manuel Abello was invited by the government to head the SEC, was an active proponent of the Revised Securities Act,
and participated in the drafting of the Corporation Code of the Philippines. Roco Bunag Kapunan & Migallos has also
garnered a solid reputation in this area. Name partner, Senator Roco was accredited as the instrumental force in the
proposal and passage of two major legislative bills this year, the Securities Regulation Code and the General Banking
Law of 2000. Quiason Makalintal Barot Torres & Ibarra has also undertaken significant work in the field. The firm was
responsible for the innovative listing of ABS-CBN, Philippines largest television network. Under the Constitution, a
Philippine corporation must own the network. Quiason Makalintal Barot Torres & Ibarra was able to bypass the
prohibition using a unique arrangement whereby Philippine Depository Receipts were adapted so as to allow foreign
investors to acquire the station. The receipts are currently listed as the best performing equity in the market and the
scheme has set the standard for other similarly situated companies. In respect of the mining sector, Quisumbing
Torres' Natural Resources team specializes in the creation of structured security arrangements for loan facilities,
creating a mechanism to effectively mortgage in favour of the lender the contractor's rights under an FTAA or MPSA.
Lastly, Carpio Villaraza & Cruz and PECABAR also received recommendations for their work in this area.

Dispute Resolution
The practice of litigation in the Philippines remains one area of specialty where individual practitioners retain a
significant proportion of the work. First among these is universally recognized litigator Estelito P Mendoza, who is still
preoccupied with defending the Marcos family from a myriad of claims. Lawyers in Manila almost invariably cite him as
the top litigator in the country. Among the firms that are well regarded for their dispute resolution departments,
ACCRALAW; Poblador Bautista & Reyes; Castillo Laman Tan Pantaleon & San Jose and SyCip Salazar Hernandez &
Gatmaitan received the most praise for their expertise. In the case of ACCRALAW, partner Rogelio Vinluan continues
to be acknowledged as a top litigator. The firm was actively involved in several major commercial litigations this year
and represented the Philippine Long Distance Telephone company (PLDT) in its contested liability suit brought forward
by NAPOCOR for alleged damage to sub-marine power cables. At present NAPOCOR has entered into a compromise
agreement with the contractor and has dismissed and waived all claims against PLDT. In another high profile case,
ACCRALAW successfully argued against the continued injunction brought forward by minority shareholders contesting
the PLDT-SMART Telecom merger; and under similar factual circumstances, ACCRALAW successfully defended
against an effort to impugn the sale of shares by the Macaria Madrigal family to MetroBank against the Bank of Nova
Scotia, who were the minority shareholders. As for Poblador Bautista & Reyes, the firm is able to boast the election of
all three of its name partners as leading lawyers in Asia Law's annual survey. The firm continues to be very active,
representing PepsiCo in one of the largest active consumer liability litigation cases in Philippine history. Handling the
vast majority of the 2,000 to 2,500 cases leveled against PepsiCo in relation to a marketing campaign that left over a
million possible claimants with the impression that they had won a major prize, the firm is not short of assignments. In
other work, Poblador Bautista & Reyes has a significant practice in real estate litigation, where it represented the top
three land developers against a recent spate of fraudulent claims with respect to land registration, a get-rich tactic
frequently used by underworld elements. Castillo Laman Tan Pantaleon & San Jose also garners respect amongst its
peers. In-house counsel and has three partners devoted to its dispute resolution practice. The firm successfully
represented the Philippine National Construction Corporation (PNCC) against private claims before the Securities
Exchange Commission. The victory will permit government shares in PNCC to be sold in a bidding process. SyCip
Salazar Hernandez & Gatmaitan's litigators have also been very active recently. This is due in large measure to their
work for Philip Morris in the massive tobacco litigation suits that have been filling the court dockets in the Philippines of
late.

Among other firms with prominent litigation departments is Platon Martinez Flores San Pedro & Leao who act as sole
counsel for Caltex Philippines Inc. and its affiliates. The firm is active in claims involving more than 4,000 surviving
plaintiffs of the thousands of victims of what is considered one of the worst maritime disasters ever. In a Supreme
Court judgment issued in late 1999, Platon Martinez Flores San Pedro & Leao successfully argued against the
corporation's liability in the collision. The firm continues to assist New Orleans firm, Liskow & Lewis and Houston firm,
Fulbright & Jaworski, in connection with a class action suit filed against Caltex Philippines and Caltex Corporations on
behalf of the survivors and heirs of the maritime accident. In other work, Platon Martinez Flores San Pedro & Leao is
still assisting Freshfields (London) in the recovery of assets acquired through funds allegedly misappropriated by
Prince Jefri Bolkiah of Brunei and the Brunei Investment Agency that were diverted to various centers, including the
Philippines. The Philippine assets are now the subject of initial adverse proceedings instituted by Platon Martinez
Flores San Pedro & Leao. The aggregate amount of properties are valued at US$100 million.

A number of other firms were cited as having proficient litigation departments during the course of our research.
Interestingly, Quisumbing Torres claims an expertise in servicing cross-jurisdictional disputes, and emphasises its
Baker & McKenzie affiliation in claiming a wide resource of expertise to draw on. It is also notable that name partner
and head of the litigation practice group Ramon J Quisumbing was also recognized as a leading lawyer in this year's
AsiaLaw Leading Lawyer survey. Ortega, Del Castillo, Bacorro, Odulio, Calma & Carbonnell also boasts a
specialization in relation to their media, IP, and Admiralty law practice groups. The firm is counsel to the Philippine
Daily Inquirer and Today against litigious suits against both newspapers. Among the many interesting cases this year,
name partner Tomas Del. Castillo, Jr. was able to argue for dismissal against a libel suit brought forward by Imelda
Marcos and her youngest daughter against the Inquirer's editor. Minter Ellison is increasingly using Carpio Villaraza &
Cruz for its Philippine work, while Castillo & Poblador's managing partner Napoleon Poblador was recognized as an
AsiaLaw Leading Lawyer. Carpio Villaraza & Cruz is currently assisting Dole Philippines and along with other
agricultural companies in connection with claims for damages leveled against them. The firm is also representing SM
Investment Inc., the owner/operators of mega shopping centres, in their litigation cases. Because one of Carpio
Villaraza & Cruz's senior partners is the acting Director of Legal Aid of the Philippines Integrated Bar, the firm has a
close working relationship with the Department of Social Welfare & Development directed by Vice-President Gloria
Macapagal-Arroyo. In the past year, the firm undertook several pro bono cases on behalf of indigent clients.

Castillo & Poblador Law Offices with AsiaLaw Leading Lawyer, Napoleon Poblador; PECABAR; Carag Caballes
Jamora & Somera; Antonio Bautista & Partners; Benitez Parlade Africa Herrera Parlade & Panga Law Offices; and
Ongkiko Kalaw Manhit & Acorda Law Offices also received notice for their litigation work.

Intellectual Property
In order to comply with the Philippines' commitment to the GATT Agreement on the Trade Related Aspects of
Intellectual Property Rights ("TRIPs"), the Intellectual Property Code ("IPC") took effect in 1998. Implementing
regulations delineating the comprehensive registration procedure for acquiring and protecting these rights have been
taking effect since. In the area of patent and industrial designs, rights are now acquired on a first-to-file basis - stopping
the type of claims by local inventors that they were the first to invent well-known designs in the Philippines that were in
place through the previous system. For trademark rights, a first-to-register system has usurped the previous first use
regime, leaving less room for pirates to claim they have title to internationally known marks. Furthermore, actual
commercial use of these marks has to be proven within three years of registration by the rights-holder. In addition,
there are special provisions for protecting internationally-renown marks even in the absence of a specific registration in
the Philippines. In addition, dedicated IP courts have been created. Coupled with the advent of these specialised
tribunals, the new code has been greeted with a changing judicial perspective on the integrity of IP rights. The efforts
have been surprisingly successful, and point at the need to expose rights infringements by even the most legitimate
business interests.

Despite the progressive laws and intense efforts by the government, there is still a massive amount of piracy and
counterfeiting. Nevertheless, foreign companies are intent on protecting their rights and have engaged several law
firms in this pursuit. In IP work, Romulo, Mabanta, Buenaventura, Sayoc & de los Angeles is very well regarded for its
work in the area of patents. At ACCRALAW, Lila Quirino is renown as one of the noted IP specialists in the country.
Ortega, Del Castillo, Bacorro Odulio, Calma & Carbonell also has a significant trademarks practice that has placed
emphasis on the telecommunications sector. The firm has also advised UK and US pharmaceutical and chemical
companies. Ortega, Del Castillo, Bacorro Odulio, Calma & Carbonell counts among its clients Lucent Technologies,
Deutsches Telecom and AT&T. Poblador Baustista & Reyes has been exceptionally active in several major IP
enforcement disputes. The firm currently represents pharmaceutical companies' IP interests against generic drugs and
parallel imports. As well, Poblador Baustista & Reyes is representing the American Association of Publishers in a
copyright dispute whereby the firm is working to obtain a special announcement from the government to officially re-
enforce the repeal of the reprinting provision in the Intellectual Property Code. In trademarks work, the firm is also
working on the issue of international fame in the Caterpillar Inc. trademarks dispute.

The well-regarded IP department of SyCip Salazar Hernandez & Gatmaitan has acted for Microsoft, as has
Quisumbing Torres. Carag, Caballes, Jamora & Somera has a notable reputation in this practice area with name
partner Carlo Carag, as the only Philippine attorney cited in AsiaLaw Leading Lawyers for Intellectual Property
expertise. The firm's work focuses on enforcement actions against local and parallel importers for commodity goods.
Carag, Caballes, Jamora & Somera boasts of a client list which includes Louis Vuitton Malletier, Nike, SkyTV, Turner
Entertainment and Warner Brothers. As a testament to the firm's growing expertise, many of its peers consider it to be
a boutique IP firm. Described as young and aggressive by a well-placed lawyer in another firm, it is gaining a
reputation in the field. Other local firms with substantive practices include Quasha Ancheta Pea & Nolasco, who acted
as counsel to several name brand liquor producers and distributors in defending their rights against parallel importers.
The firm also represents legitimate mining companies in their disputes against claim jumpers, alleged small-scale
miners who defy the spirit of the country's natural resources laws. Roco Bunag Kapunan & Migallos has a substantial
practice in IP for registration and enforcement work. As part of a network of IP professionals, the firm is able to monitor
IP transgressions against its clients which include Disney, Dreamworks and Daewoo. Furthermore, Castillo Laman Tan
Pantaleon & San Jose represents more than 50 pharmaceutical companies and recently argued for Hoechst
Pharmaceutical on the issue of the protection of its foreign brand in the Philippine Supreme Court.

In addition, several firms were also favourably mentioned during the course of our research. Specialist IP boutique firm
Poblador Azada & Buco and Carpio Villaraza & Cruz are well spoken of, while Platon Martinez Flores San Pedro &
Leao; Siguion Reyna Montecillo & Ongsiako; Quiason Makalintal Barot Torres & Ibarra and PECABAR also handle a
respectable base of clients.
Projects
Last year, projects work on existent developments had slowed but there are a number of significant new ones. This is
especially the case in the power sector, and there may be more work should the NAPOCOR power privatization plan
ever get underway. This may be slow in coming due to the problems related with the disqualification of a number of
bids. However, legislation is forthcoming and, optimistically, it will open up this sector to competition and foreign
investment. Many industry insiders hope as well, that clear guidelines as to the government procurement of contracts
will also be included. Throughout the country, there is a crushing need for more reforms and projects in the water
provision and transportation sectors, and local governments should be proposing more such developments in the near
future. In terms of efforts that have borne fruit, there was recently a significant privatization of the Metropolitan (Manila)
Water-works and Sewerage System.

The largest four corporate and commercial firms were the most highly regarded for projects work, although among
these SyCip Salazar Hernandez & Gatmaitan was considered by a large majority to be the leading firm. In terms of
urban projects work, the firm was involved in the Metro Manila Skyway Project and the Metro Rail Transit Project. For
its project and infrastructure work, Sycip Salazar Hernandez & Gatmaitan represented numerous companies, and a
sample of its clients includes CBK financing, Tomen Power (Singapore) Pte. Ltd, and IMPSA Asia Ltd. who all have
major project financing work within the country. ACCRALAW, was generally regarded as an excellent firm for projects
work, and was involved in numerous project and infrastructure works this year. The firm is currently assisting the World
Bank in drafting the proposed Water Regulatory Commission Act for the Government of the Philippines. In the power
sector, ACCRALAW assisted Ogden Energy Asia Pacific, Ltd. in connection with its interest in the Mauban Power
Project in Quezon, and its interest in the power plant in Mariveles, Bataan. The firm also represents Salcon Power
Corporation in the 7-Islands Electrification Project and the various Bunker-fired Power Plants located in several
different Philippine provinces. ACCRALAW also acted for Takenaka Corporation Philippine Branch in negotiating its bid
in the Terminal Three Nino Aquino International Airport construction project. Carag, Caballes, Jamora & Somera has
also been retained as counsel to Takenaka Corporation Philippine Branch. At the time of press, there was still
controversy over whether or not the government would actually award this bid despite its announcement as such. This
is due to recent rumours that an unprocured counter-offer had been granted to a private Philippine company who plans
to build the new terminal on another site, the former grounds of the US naval base.

In addition to SyCip Salazar Hernandez & Gatmaitan and ACCRALAW, Romulo, Mabanta, Buenaventura, Sayoc & de
los Angeles and Castillo Laman Tan Pantaleon & San Jose round out the group of leading projects firms. The latter firm
continues to act as Philippine counsel for the lenders of the Metro Rail Transit Corporation (MRT), led by the Japan
Bank for International Cooperation. The MRT is a major infrastructure project by the Philippine government and is the
first completed build-lease-transfer railroad project in the Philippines. Interestingly, the MRT project has survived three
administrations, as it was initiated during the Aquino administration, its construction commenced during the term of
Ramos, and was completed during the term of incumbent President Estrada. Castillo Laman Tan Pantaleon & San
Jose is also counsel for the lenders of Maynilad Water Co., which is the owner and operator of a sector of the former
government water company of Metro Manila, which has since been privatized. The Maynilad project is one of the first
major water privatization projects in Asia. The funding by its lenders is intended to finance the upgrading of the water
system in Metro Manila, which has proven to be a major infrastructure, utility and financial challenge.

Among other firms that attracted praise during the course of our research, Quisumbing Torres and Puno & Puno Law
Offices were notable, the former for its finance-related work on a number of projects. Carpio Villaraza & Cruz actively
represents Binnie-Black & Veatch and Thames Water on their ongoing and prospective water projects in the
Philippines. Quasha Ancheta Pea & Nolasco also claims the Takenaka Group amongst its clients, while Quiason
Makalintal Barot Torres & Ibarra is well known for their public sector utilities-related expertise borne of their long
representation of the Lopez Group. Balgos & Perez Law Offices and Fortun Narvasa & Salazar Law Offices are both
smaller operations with notable reputations. Finally, Picazo Buyco Tan Fider & Santos and Poblador Baustista & Reyes
were also noted as competent firms to service projects work.

Telecommunications
Equity transactions by telecommunications companies have led to a significant amount of legal work as the major
players seek to consolidate their place in the long distance market, and foreign companies try to tap into the rapidly
developing market demand. In the same vein, media and broadcasting issues are also developing, both in relation to
corporate organisational matters for industry players and for addressing substantive IT law issues.

The leading large four firms have been active in servicing the telecommunications providers in their effort to achieve
dominance in the market. It is also notable that Carpio Villaraza & Cruz has advised major foreign companies in this
industry that expressed an interest in investing into local entities. The firm is also advising MTV Asia, Cinemax, and
HBO Asia on possibilities in the cable TV sector, while Poblador Baustista & Reyes advises Home Cable and Quiason
Makalintal Barot Torres & Ibarra represents Benpres Co. and SkyCable in their broadcasting interests. The latter firm
also continues to assist Bayan Telecommunications, the second biggest Philippines telecommunications operator in
maintaining its landlines. Platon Martinez Flores San Pedro & Leao is involved in the joint venture between an
international telecommunications company and a Philippines company to engage in a number of Internet related
business. For their part, Belo Gozon Parel Asuncion & Lucila represents Express Telecommunications Inc. and GMA-7
Network Inc. in their corporate, restructuring and regulatory work. The firm also gives advisory services to
Aradiomarine Network and Sear Telecommunications Inc. Interestingly, Castillo Laman Tan Pantaleon & San Jose has
noticed an increase in work with respect to the establishment of call centers within the Philippines. Many US
telemarketing companies have demonstrated interest in taking advantage of the Philippines' low labour cost and the
adaptable language skills of its population. In the print media, it should be reiterated that Ortega, Del Castillo, Bacorro,
Odulio, Calma & Carbonnell is counsel to the Philippine Daily Inquirer and Today.

Labour
High incidences of poverty continue to persist in the Philippines and may have increased as a result of the crisis.
Combined with the slow recovery, particularly that of the agricultural sector, the Philippines is experiencing a sudden
upsurge in the unemployment rate. The annual round of wage adjustments remains moderate and, when adjusted for
inflation, proved to be a downturn in real income and this has created another reason for labour unrest. Moreover, the
different systems for minimum wage triggered by various trade unions further complicate the labour situation.

The Constitution guarantees security of employment and currently grounds for dismissal or any reduction of personnel
must be justified before the Department of Labour. Coupled with the elimination of jobs in key sectors due to the
economic downturn and what is considered a pro-labour Estrada administration, these factors have made labour
relations law a busy area of practice for lawyers. Previous expectations of a looming economic improvement have also
contributed to labour unrest, as workers' groups are no longer content to quell their dissent at perceived low wages
with the lifting of a period of universal austerity. Castillo Laman Tan Pantaleon & San Jose, with former Secretary of
Justice and AsiaLaw Leading Lawyer, Ancheta Tan, came highly recommended for its labour relations activities.
Specialist labour relations firm Ermitano, Sangco, Manzano & Associates is run by founding partner Luis Ermitano Sr.,
who has over 38 years experience in the field. Platon Martinez Flores San Pedro & Leao has a very strong labour law
practice group and is experienced in collective bargaining disputes, unfair labour suits and jurisdictional disputes
between unions. The firm is currently resolving wildcat strikes and jurisdictional labour disputes for Yokohama Tire
Philippines Inc. Other noteworthy firms with substantial practices include Poblador Bautista & Reyes which is counsel
to several corporations in their litigation disputes with what they call professional complainants. For their part, Carag,
Caballes, Jamora & Somera represented Holiday Inn management in their collective bargaining with the union. Finally,
Quisumbing Torres handles numerous labour and employment services for international manufacturing companies with
investments in the Philippines. Other firms with a noted expertise in labour relations law include Siguion Reyna
Montecillo & Ongsiako; ACCRALAW; Carpio Villaraza & Cruz; Belo Gozon Parel Asuncion & Lucila; Quasha Ancheta
Pea & Nolasco; SyCip Salazar Hernandez & Gatmaitan; and PECABAR. Interestingly, Romulo, Mabanta,
Buenaventura, Sayoc & de los Angeles is known for representing labour groups in disputes.

Maritime/Admiralty
A number of protection and indemnity clubs are active in the Philippines, which is an active maritime centre. In our
research, three firms were particularly noted for their work on behalf of shipping companies or the insurance interests
that service them. Ortega Del Castillo Bacorro Odulio Calma & Carbonnell is a pioneer in the field, while Del Rosario &
Del Rosario is noted for their niche practice in this area of law. It is interesting to note that Del Rosario was a former
partner at Ortega Del Castillo Bacorro Odulio Calma & Carbonnell. Carag Caballes Jamora & Somera with noted
admiralty law specialist Benjamin A Somera Jr. is also prominent in the field. Given the fact that Pandiman Philippine
(in association with Llyod's of London) is a major client of Carag, Caballes, Jamora & Somera, the firm currently
represents the majority of maritime transactions in the country, which includes insurance and litigation work involving
cargo claims, co-claims and collision cases. Interestingly, Quasha Ancheta Pea & Nolasco represents the ITF, one of
the largest union organizations in the world, in the protection of seamen's rights and in pursuit and seizure of vessels
belonging to owners that don't pay wages.

Karen Shaw