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The Internet and doing business in the Philippines

“The department store is online now.” – Warren Buffett on the transformation of retail as we know it.

The Internet has revolutionized the way of doing business. It has expanded the reach of businesses beyond territorial jurisdictions and created a seemingly borderless world. The mode by which commercial transactions are conducted has drastically changed — allowing businesses and individuals all over the world to instantaneously interact across state boundaries without need of face to face interaction and physical spaces.

Early this year, the Securities and Exchange Commission (SEC) issued an opinion stating that an online gaming system with absolutely no physical presence in the Philippines, shall be considered as “doing business” in the Philippines and was thus required to obtain a license to do business from the SEC. It did not matter that the company had no physical office, no employees, and no physical servers located within the Philippines. Anyone from the Philippines who has access to the Internet could access the Web site, open an account and purchase online gaming content. There is no physical delivery of any product to the Philippines, as the content is offered, sold and accessed exclusively online.

The hallmark twin-characterization test for determining whether an entity is doing business in the Philippines was laid down in the case of Mentholatum Co., Inc. v. Mangiliman. It provides that for a foreign corporation to be deemed doing business in the Philippines, there must be a showing that first, the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized; and second, the foreign corporation is engaged in activities which implies a continuity of commercial dealings, and contemplates the progressive prosecution of the purpose and object of its organization. This definition has been codified in the Foreign Investments Act which defines “doing business” as “soliciting orders, service contracts, opening offices, whether called ‘liaison’ offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling 180 days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization.”

Given the above definition, the question remains — is mere online activity sufficient to constitute “doing business” within the Philippines? The SEC seems to answer in the affirmative.

The SEC cited several factors to justify that the corporation was doing business in the Philippines: 1) creation of the online account takes place in the Philippines; 2) access is made by users located in the Philippines; 3) payment of the content is made from within the Philippines using local credit cards; and 4) delivery of the online content is made in the Philippines. The IP address located in the Philippines receives the offer of services, sends the acceptance of the offer to the virtual plane and finally, the content or service is delivered through said virtual plane to the account holder’s IP address in the Philippines. Clearly, says the SEC, “the transactions will be consummated in the Philippines.”

Under existing laws, a foreign corporation deemed “doing business” in the Philippines is required to obtain a license to do so from the SEC. The failure to obtain such license will prevent the foreign corporation from having the personality to take refuge in Philippine courts and from invoking Philippine law, if aggrieved. However, despite the inability to maintain any suit or proceeding, such corporation may be proceeded against before Philippine courts. In short, it can be sued, but it cannot sue.

The opinion of the SEC, however, has far-reaching implications beyond the requirement to obtain a license to do business, which may prove problematic for all other entities similarly situated operating solely via the Internet. What could be the impact to online retail stores like Amazon and eBay; online social platforms like Facebook; online news portals like The New York Times and all other entities that have not established physical presence within the Philippines and yet derive business and online traffic from within the Philippines — will all such entities now be required to obtain licenses from the SEC? If so, how will Philippine regulatory agencies regulate these activities and impose sanctions, if needed? If these entities will be considered doing business in the Philippines, are nationality requirements applicable to them? And if so, how could the same be enforced against them? This is particularly significant given the recent controversial pronouncements of the SEC defining “mass media,” which must be 100% Filipino owned, to include “any medium of communication deigned to reach the masses.”

To this end, the SEC has classified even billboards as mass media, which must therefore be 100% Filipino owned. Given this, will online media such as The New York Times and even Facebook now be prohibited from making its content accessible in the Philippines? The implications to business and investment are endless and it may take a bit longer than a fortnight before we get some clarity.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes, and not offered as, and does not constitute, legal advice or legal opinion.

Jacquelyn Ann Marie G. Anzures is an Associate of the Corporate and Special Projects Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW). She may be contacted at jganzures@accralaw.com or (632) 830-8000.

Yeng Guiao, Raymond Yu share same philosophy of giving average players an opportunity to get better

YENG GUIAO and Raymond Yu may have already ended their five-year fruitful partnership with Rain or Shine, but they still uphold the same philosophy of giving opportunity to players who were barely given a chance to prove their worth.

Now head coach and general manager of the NLEX Road Warriors, Mr. Guiao is still upholding the same wisdom in his new squad.

“I always do that,” Mr. Guiao told BusinessWorld. “In evey team I coach, I always wanted to develop players and turn them to good players.”

The six-time champion coach has a penchant in turning virtual unknowns to be recognized.

Jonathan Uyloan was a walk-in applicant, an undrafted player who continued to try out until Mr. Guiao gave him the opportunity after spending a few years on the reserve list.

Mr. Guiao also tapped the full potential of JR Quiñahan, who pushed himself to go the extra mile. The 6-foot-6 veteran slotman has been reunited with his old coach at the Road Warriors camp.

Then of course, Mr. Guiao was able to develop his own stars.

Jeff Chan was just an average player until Mr. Guiao came in and made him his star swingman at the Elasto Painters side. He had won two championships with the squad, got selected to play for Gilas Pilipinas for several years and became PBA Finals Most Valuable Player and many-time All-Star.

Beau Belga had also taken similar path. Once a journeyman, bouncing out from one team to another, Mr. Belga had earned a reputation of becoming the PBA’s modern day enforcer, who blossomed to become a star.

In NLEX, Mr. Guiao is doing similar things, trying to get the best out of marginal players like Raul Soyud, Juami Tiongson and Jansen Rios while also giving Rabeh Al-Hussaini a second chance.

“I think all coaches want to give players the chance, but not all is willing to take the risk. Are they willing to risk their career for these players? We have to remember that players win games, coaches lose them,” added Mr. Guiao.

Mr. Yu, the amiable owner of Rain or Shine’s basketball franchise, had continued his philosophy of giving opportunity to those players whose potential had yet to be tapped.

He sees Mark Borboran as a player who has great potential, but barely given a chance by his previous teams and that’s the reason why Rain or Shine agreed to part ways with Mr. Chan in exchange for the 6-foot-5 player from University of the East.

“If you look at Borboran, he’s a player who has yet to find his identity, yet the talent is there,” said Mr. Yu. “We’ve been trying to get him ever since, but we didn’t get much of a chance.”

For Mr. Yu, getting Mr. Borboran is worth taking the risk.

“He is a good player, but he doesn’t have the swagger,” added Mr. Yu. “But definitely, he is an asset to our team.”

“The question is, what is keeping him to performing better? I think Borboran has a lot to show. He’s just meek and that is his personality, but we’re willing to give him the opportunity of becoming a better player.”

True enough, the Elasto Painters had won back-to-back games since they traded Mr. Chan for Mr. Borboran as Rain or Shine found themselves back in contention for the playoffs. — Rey Joble

DoF approves changes to e-tricycle program

THE Department of Energy (DoE) has gained the backing of the Department of Finance (DoF) for its request to amend the terms of the contract relating to electric tricycles (e-trikes) and allow private sector participation in the costly project that has remained without takers.

“(DoF’s) internal legal (experts) have already approved our amendments,” said DoE Assistant Secretary Leonido J. Pulido III on Wednesday on the sidelines of the DoE’s budget hearing at the Senate.

He earlier said that the DoE had asked the Asian Development Bank (ADB) to tweak the terms of the loan to revive the project, but on a significantly scaled-down basis. The DoF and the ADB are the signatories of the contract.

The program, initiated by the previous DoE leadership, was originally designed for the use of local government units, but they were reluctant to buy the vehicles because of their cost and the process involved in the acquisition.

After much delay, the present DoE officials decided to roll out 3,000 e-trikes out of the original 100,000, lowering the project cost to P1.73 billion from P21.672 billion. The funding was sourced by the past administration through a loan from the ADB.

The new contract terms seek to expand the project to make it available to the private sector.

“We’re hoping to sign the amendments of the loan agreement within a week or two,” Mr. Pulido said.

“The DoE is not a partner to those contracts. The signatories of the contract are the DoF and the ADB. But since the DoE is the implementing and executing agency, we were the ones who first essentially realized that the deployment model is flawed and it has to be modified,” he said.

He previously said that although the cost of the vehicle remains the same, the private sector has more leeway and can be more flexible in adopting a business model that can work. — Victor V. Saulon

PHL banks to continue expanding in 2017, 2018

By Janine Marie D. Soliman,
Reporter

THE PHILIPPINE banking industry is expected to continue growing this year and next, driven by the sector’s low interest rates, improved asset quality, solid profitability, boosted by the country’s strong economic growth, an economist at S&P Ratings Services said.

S&P credit analyst Ivan Tan said Philippine banks are expected to continue expanding in 2017 and 2018, with loan growth seen to hit a 15% to 17% in the next two years, higher than end-2016’s actual 16.5% increase.

“We believe that the credit cycle in the Philippines has further to run,” Mr. Tan was quoted saying in an Aug. 23 report titled Philippine Banks To Continue To Ride Robust Economic Growth.

“Most of the factors that drive credit cycles — corporate profits, low interest rates, and abundant liquidity — still look very much in place,” he added.

Data from the Bangko Sentral ng Pilipinas (BSP) bared domestic liquidity or M3 expanded by 13.2% in June to P9.878 trillion on the back of strong appetite for credit, which in turn, fuelled growth in money supply.

M3 growth, which is the broadest measure of money in an economy, picked up from the downward-revised 11.3% in May and is the fastest pace seen in a year or since a 13.4% rise in July 2016. It grew 1.8% month-on-month.

Loan growth among Philippine banks is expected to remain strong compared to its regional peers for the next two years amid S&P’s view of sustained expansion, and with borrowing costs and interest rates remaining low “by historical standards” and banks still having excess liquidity to lend.

“Credit penetration is moderately low, with private sector credit-to-GDP (gross domestic product) ratio of about 50%, and with room to rise,” Mr. Tan said in the report.

The global debt watcher also noted that the country’s robust economic fundamentals will support the banking sector’s borrower repayment.

S&P added that the government’s proposed tax reform “could reinforce the positive credit cycle, in our view.”

“The proposals could lead to higher disposable incomes and consumer spending. Lower personal income tax rates could boost the spending power of wage earners while the reduced corporate income tax rate could encourage investments. By broadening the revenue base and raising revenue from new sources, the government may be able to increase spending on much-needed infrastructure and human capital to drive economic growth,” Mr. Tan said in the report.

Amid strong economic and financial fundamentals, the global credit rater said it has a stable outlook for the sector, citing the industry’s capital adequacy ratio (CAR) of 15.3% by end-March which is “comfortably above regulatory minimum.”

S&P had kept its 6.4% economic growth forecast for the country after GDP grew by 6.5% in the second quarter, slightly faster from first quarter’s 6.4% but easing from the year-ago’s 7.1% reading, which was boosted by expenditures related to the May 2016 general elections.

This brought first-half growth to 6.45%, slightly up the government’s 6.5-7.5% growth projection for end-2017.

The tax plan, which is expected to be in place by 2018, will raise the excise duties on oil, cars and sugar-sweetened beverages and reduce exemptions to the value-added tax, coupled with a reduction in personal income tax rates.

Despite its outlook of a positive credit cycle for the sector, S&P noted it sees consumer lending a weak spot, noting: “Consumer lending, however, is a relatively unfamiliar territory and the availability of consumer data is limited.”

“Philippines’ consumer loans segment has considerable potential for growth, in our view. However, the high branching costs to reach customers in this large archipelago is a hindrance. Banks are also justifiably cautious, given the lack of comprehensive consumer data and the high reported consumer NPLs (non-performing loans),” Mr. Tan said.

At end-2016, consumer non-performing loans made up 3.9% of banks’ lending business versus the sector’s overall 2% NPL ratio.

Nonetheless, S&P said the full rollout of the country’s national credit information database in the first quarter of 2018 would “improve information availability and help banks make better lending decisions.”

State-run Credit Information Corp. expects the centralized credit information system to go live by January 2018, but had noted of some system issues which may delay the process.

The Philippines holds a “BBB” rating with a “stable” outlook from S&P, one notch above minimum investment grade, which was affirmed last April, with the view that domestic conditions remain conducive for sustained economic growth.

A stable outlook means that the state’s ratings are unlikely to change over the next year.

EsDevCo, TRMH team up for mixed-use complex

DAVAO CITY — Homegrown real estate developer Escandor Development Corp. (EsDevCo) and sister firm The Royal Mandaya Hotel (TRMH) are developing an old inn into a mixed-use skyscraper.

The Escandor Group of Companies recently acquired the Royale House Travel Inn and Suites, previously owned by the Nograles, a known political clan.

The Royale Travel Inn, which used to be mainly a business traveller’s hotel, has been renamed Davao Royal Suites and Residences and now being managed by TRMH as a combined dormitory with 49 rooms, hotel with 71 rooms, a convenience store, laundry shop, coffee shop and a restaurant.

TRMH General Manager Benjie J. Banzon, Jr. said the Escandor Group plans to redevelop the 2,000-square meter (sq.m.) property in three years, converting it into a mixed-use complex with a hotel, condominium, and a commercial component. “As of the moment, we are more on the planning stage and it would take time as building a high-rise structure is not easy… We have to maximize the 2,001 sq.m.,” Mr. Banzon said.

Mr. Banzon added that they also aim to maximize the height limit in the area, which is in the center of the downtown district, and would build a structure of up to 35 floors if given permit by the city government.

Mr. Banzon said EsDevCo will lead the project development.  In the meantime, TRMH will be undertaking renovations and a redesign of the existing building.

Mr. Banzon said the Davao Royal Suites and Residences complements the operations of TRMH, also located in the city’s downtown area. “TRMH had been giving business to other hotels due to our over-bookings. We normally provide spillovers to nearby hotels,” he said. — Maya M. Padillo

Ambitious wine makers, climate change makes for good, cheap Pinot

GREAT Pinot Noirs, as a friend once put it, have a near-sexual allure. The first taste can turn you into a bottle stalker, which is why the world’s Pinot lust has pushed prices of the most coveted to three- and four-digits. Today, though, it’s easier than ever to find seductive examples with those rose-petal aromas, silky textures, and layered flavors at more affordable prices.

In Burgundy, still the grape’s ur-territory, global warming has (mostly) ensured riper grapes every year. That, along with better vineyard practices and young ambitious wine makers has upped the quality of non-snob generic Bourgogne Rouge and little-known village appellations like Santenay.

The biggest change in pinot during the past decade, though, is the rise of New Zealand, Oregon, and California, as wine makers finally zeroed in on the vine’s sweet spots. Pinot is tricky to grow, and subtle shifts in temperature and soil make the difference. In California, pinot is now the state’s third most planted grape: 44,000 acres-worth, nearly double the amount 10 years ago. The hottest success stories are in coolest areas, like the Sonoma Coast, Mendocino, the Santa Cruz Mountains, and Santa Barbara. Even their regional blends now have a balance and elegance California pinots rarely showed in the past.

Oregon’s Willamette Valley has grown warmer, too, giving its wines more ripe lushness. The state is booming with deep-pocketed vineyard investors that include a raft of top Burgundy producers. And half a dozen districts in New Zealand now regularly turn out intense pinots with exotic red fruit and herb flavors.

Expect more bargains in the future. For now, here are my top 15 pinots under $50.

$40 to $50

• 2014 Kelley Fox Momtazi Vineyard Pinot Noir. This boutique Oregon producer sources grapes from top vineyards for her Pinots. This one has the kind of power and mineral elegance you find in one from Burgundy’s Nuits St. Georges.

• 2014 Two Paddocks Pinot Noir. Most celebrities make pretty ordinary wines. Jurassic Park star Sam Neill, owner of this New Zealand winery in Central Otago, is a major exception. His flagship wine, a blend of four organic vineyards, is full and savory, with intense fruit flavors.

• 2014 Domaine de la Cote Santa Rita Hills Pinot Noir. You’ll see this Pinot, a partnership of sommelier Raj Parr and famed wine maker Sashi Moorman, on a lot of Manhattan wine lists. It’s light and graceful, reflecting the winery’s house style and its cool microclimate in the Santa Rita Hills.

• 2014 Flowers Winery Pinot Noir. Steep, twisting roads lead to this winery 1,500 feet above sea level on the Sonoma coast. Cool winds off the Pacific preserve the bright acidity while the warm 2014 growing season gave this wine a taste of rich, dark cherries and a lush texture.

• 2014 Domaine Drouhin Pinot Noir Dundee Hills. Well-known Burgundy negociant Maison Joseph Drouhin was the first French producer to buy vineyard land in Oregon, and 2017 is the winery’s 30th anniversary. Its basic Pinot, from a fine, exuberant vintage, is a heady mix of ripe fruit and savory cherry notes.

$30 to $40

• 2014 Tyler Pinot Noir Santa Barbara County. Intense flower and spice aromas, and fresh, crunchy fruit are the hallmarks of the Pinots from young, talented Justin Willett. His entry-level blend is a good introduction to the brilliant style of his much more expensive single vineyard Pinots.

• 2015 Sarah’s Vineyard Santa Lucia Highlands Pinot Noir. Pinot noir is this winery’s claim to fame, and this one, with lush dark fruit, comes from its appellation series, which highlights top districts for growing the grape. Santa Lucia Highlands is close to cold Monterey Bay.

• 2014 Burn Cottage Cashburn. Sonoma wine maker Ted Lemon, of Littorai fame, directs the vineyards and wine making at this biodynamic estate in New Zealand’s Central Otago. The juicy, sensual, light-bodied Cashburn is the winery’s second, cheaper label.

• 2014 Carpe Diem Pinot Noir Anderson Valley. Not far from the Mendocino coast, fog-shrouded Anderson Valley has gained a reputation for bright, exciting Pinots. The cool climate is the reason for this wine’s vivid black cherry flavors and intense rose petal and spice aromas.

• 2014 Maison L’Envoye Two Messengers. This US negotiant project, which debuted in 2011, now has footprints in Burgundy, Oregon, and Tasmania. This smooth, mineral-accented, spicy pinot comes from several vineyards in Oregon’s Willamette Valley.

$20 to $30

• 2015 Domaine Alain Hudelot-Noellat Bourgogne Rouge. Rock-star wine maker Charles Van Canneyt makes one of the best examples of generic red Burgundy around, especially in this top vintage. Its bright, pure, ripe cherries flavor and sensual texture remind me of a Chambolle Musigny.

• 2015 Domaine Marc Colin Santenay Rouge Les Champs Claude Vieilles Vignes. Few producers make vibrant, silky-textured reds like this one. The grapes come from 100-year-old vines right next to a premier cru vineyard.

• 2015 Bodega Chacra Barda Pinot Noir. Yes, Argentina is still malbec country, but Tuscan wine maker Piero Incisa della Rocchetta (whose grandfather founded Italy’s great Sassicaia), discovered abandoned pinot vines in cool Rio Negro, Patagonia. He now makes several stellar Pinots, including his pure, graceful, entry-level Barda.

• 2014 Domaine des Terres Dorées (Jean-Paul Brun) Bourgogne Pinot Noir. The pinot vines for this superb wine are, surprisingly, in Beaujolais, where gamay is the reigning grape. Iconic wine maker Jean-Paul Brun’s only Pinot is a juicy, tangy wine with the depth and complexity of many reds in the Côte d’Or.

• 2014 Montinore Red Cap Pinot Noir. A surprisingly satisfying Pinot for the price, this Oregon bargain is made from 100% certified biodynamic grapes. It’s a drink-me-now version of the state’s bright, fresh, red berry and spice style. – Elin McCoy, Bloomberg

Typhoon batters Hong Kong; streets flooded, flights canceled

HONG KONG — Typhoon Hato, a maximum category 10 storm, slammed into Hong Kong on Wednesday lashing the Asian financial hub with wind and rain that uprooted trees and forced most businesses to close, while in some places big waves flooded seaside streets.

There were reports of 34 people injured in Hong Kong while in the city of Macau, across the Pearl River estuary, three people were killed, authorities there said.

In Hong Kong, more than 450 flights were canceled, financial markets suspended and schools closed as Hato bore down, the first category 10 storm to hit the city since 2012.

“I’ve never seen one like this,” Garrett Quigley, a longtime resident of Lantau island to the west of the city, said of the storm.

“Cars are half submerged and roads are impassable with flooding and huge trees down. It’s crazy.”

Many skyscrapers in the heart of Hong Kong were empty and dark as office workers stayed at home.

Hato churned up Hong Kong’s Victoria Harbour and triggered large swells and big waves on some of the city’s most popular beaches, with serious flooding in low-lying areas.

In residential districts like Heng Fa Chuen on densely populated Hong Kong island, waves smashed against the sides of oceanfront buildings and surged over a promenade, swamping roads and vehicles parked nearby.

Construction cranes swayed at the tops of skyscrapers, windows imploded and nearly 200 trees were uprooted, while some people used canoes to venture out into flooded streets.

Authorities downgraded the storm to a category eight by mid-afternoon.

HIGH SEAS
The storm also caused a power blackout across most of the gambling hub of Macau for about two hours, residents said, with disruption to mobile phone and internet networks.

The former Portuguese colony’s casinos, however, had backup power, two casino executives told Reuters.

The storm also made landfall in China’s Guangdong province, in Zhuhai city adjacent to Macau, China’s Xinhua state news agency.

Numerous flights and trains were canceled in Guangdong province, with Shenzhen’s International Airport particularly badly hit.

Thousands of residents along the Chinese coast were evacuated and fishing vessels were called back to port.

Maximum winds near Hato’s center were recorded at a destructive 155 kph (95 mph).

A senior scientific officer for the Hong Kong observatory warned that sea levels could rise several meters in some places, with the government issuing flood alerts and opening 27 shelters across the city.

Trading in Hong Kong’s financial markets was halted for the day, the stock exchange said. Typhoon Nida in August last year was the last storm to close the exchange for the whole day.

The city’s flagship carrier, Cathay Pacific, and Hong Kong Airlines said the majority of their flights to and from Hong Kong between 2200 GMT Tuesday and 0900 GMT Wednesday would be canceled.

Other transport services, including ferries to the gaming hub of Macau and outlying islands in Hong Kong, were suspended. — Reuters

5.1 tremor shakes Leyte

A MAGNITUDE 5.1 earthquake shook Leyte at 6:26 a.m. yesterday, with the epicenter located in the town of Albuera. The Philippine Institute of Volcanology and Seismology (Phivolcs) reported in its bulletin that intensity 5 was felt in Ormoc City. intensity 4 in Pastrana, and intensity 3 in Tacloban City and Palo. A slight intensity 1 was also recorded in Cebu City, located in the neighboring island province of Cebu. Ormoc City was among the areas most affected by a magnitude 6.5 tremor last July 6, with the epicenter eight kilometers southwest of Jaro. Houses, buildings, public infrastructure, and energy facilities were damaged. Phivolcs said aftershocks were expected from yesterday’s earthquake.

Saint Louis Rapid/Blitz

After the Sinquefield Cup came the Rapid/Blitz tournament played in the same venue, the Saint Louis Chess Club. The format is exactly the same as in Paris and Leuven, with nine rounds of 25-minute rapid split over the first three days followed by 18 rounds of 5-minute blitz on the next two. The Rapid portion has double-weight — you multiply its results by 2 before adding the points to the Blitz portion to get the combined standings.

Once again instead of the increment where a few seconds are added to your block after every move (the Fischer clock) we instead have a delay (this is called the Bronstein clock): 10 seconds per move in rapid and three seconds per move in blitz. The 10 or three seconds is just a delay before the clock starts running — it is not added to your time. In other words, once you are in time trouble you can no longer get out of it by moving instantaneously in the next few moves.

In this year’s Grand Chess Tour there are three such rapid/blitz tournaments and the participants can only play in two of them. Magnus Carlsen, Wesley So and Maxime Vachier-Lagrave had already played in the Paris and Louvain legs and were thus not eligible for Saint Louis. Their replacements though were more than adequate. First you have the greatest player of all time Garry Kasparov who agreed to come out of retirement (that was 12 years ago) and play. Other wild cards who came just for this leg were Le Quang Liem (Vietnam) and Leinier Dominguez Perez (Cuba), both of whom were former World Blitz Chess Champions.

The presence of Garry Kasparov ensured that the Saint Louis Chess Club would be jampacked for the duration of the tournament and that all online records would be broken.

Aronian came off the gate with a beautiful win against Navara, which I will show you later, and kept among the leaders through the 1st and 2nd day. He was obviously in good form and unleashed his patented Ruy Lopez treatment from the Black side of the Spanish Opening. We will also show this to you later.

* * *
2017 Saint Louis Rapid
Saint Louis, USA
Aug. 14-16, 2017

Final Standings (with Rapid Ratings)

1. Levon Aronian ARM 2794, 6.0/9

2-3. Hikaru Nakamura USA 2822, Fabiano Caruana USA 2700, 5.5/9

4. Ian Nepomniachtchi RUS 2810, 5.0/9

5. Lenier Dominguez Perez CUB 2803, 4.5/9

6-7. Le Quang Liem VIE 2761, Sergey Karjakin RUS 2765, 4.0/9

8-10. Garry Kasparov RUS, Viswanathan Anand IND 2778, David Navara CZE 2737, 3.5/9

Time Control: 25 minutes play-to-finish with a 10 second delay each move.

Take a look at the one on 7th place in the tournament crosstable — Sergey Karjakin. You might think he is down and out for the rest of the event, but Karjakin scored 8/9 in the 1st half of the Blitz portion to almost catch up with Aronian in the combined standings. But he then slowed down in the second half with losses against Nakamura and Navara and by the end of the tournament Aronian was 3 points ahead in the combined standings.

* * *
2017 Saint Louis Blitz
Saint Louis, USA
Aug. 17-18, 2017

Final Standings (with Blitz Ratings)

1. Sergey Karjakin RUS 2807, 13.5/18

2. Levon Aronian ARM 2794, 12.5/18

3. Hikaru Nakamura USA 2868, 10.5/18 4 Ian Nepomniachtchi RUS 2787, 10.0/18

5. Garry Kasparov RUS, 9.0/18

6. Le Quang Liem VIE 2747, 8.5/18

7. Leinier Dominguez Perez CUB 2796, 7.5/18

8. Viswanathan Anand IND 2756, 7.0/18

9. David Navara CZE 2748, 6.0/18

10. Fabiano Caruana USA 2806, 5.5/18

Time Control: Five minutes play-to-finish with a 3 second delay each move.

* * *
2017 Saint Louis Combined Standings
Saint Louis, USA
Aug. 17-18, 2017

Combined Standings (Rapid counts double)

1. Levon Aronian ARM, 24.5/36

2-3. Sergey Karjakin RUS, Hikaru Nakamura USA, 21.5/36

4. Ian Nepomniachtchi RUS, 20.0/36

5-7. Leinier Dominguez Perez CUBN, Fabiano Caruana USA, Le Quang Liem VIE, 16.5/36

8. Garry Kasparov RUS 16.0/36

9. Viswanathan Anand IND 14.0/3610 David Navara CZE 13.0/36

Here are the games I promised to show you.

* * *
Aronian, Levon (2799) — Navara, David (2737) [E15]
Saint Louis Rapid 2017 USA (1.4), 14.08.2017

1.d4 Nf6 2.c4 e6 3.Nf3 b6 4.g3 Ba6 5.b3 Bb4+ 6.Bd2 Be7

The Queen’s Indian is Navara’s main defense against 1.d4.

7.Nc3 0–0 8.Bg2 d5 9.cxd5 exd5 10.0–0

Black has two main plans here, either to go for the old school Karpov…c7–c5 or Kramnik’s more modern approach with…c7–c6.

10…Re8 11.Ne5 Bb7 12.Qc2 c5 13.dxc5 bxc5 14.Rad1 Qc8

Black has two hanging pawns in the center but it is not easy getting to them. Aronian has a new idea though.

15.e4 Bf8

[15…d4 16.Nd5 Nxd5 17.exd5 Nd7 18.Nc6 does not look very appealing for Black]

16.f4 d4 17.Nd5 Nxd5 18.exd5 f6 <D>

Position after 18…f6

Trying to expel the knight. This is much more appealing than 18…Nd7 19.Bh3

19.Rde1! fxe5 20.fxe5

Aronian’s threat is e5–e6 followed by Qf7.

20…Nd7 21.e6 Nf6 22.Rxf6! gxf6 23.Qf5

New threat is Re1–e4–g4.

23…Qd8? 24.Re4 Re7 25.Rg4+ Kh8

Hopeless:

25…Rg7 26.Be4 Rg6 27.Rxg6+ hxg6 28.Qxg6+ Bg7 29.Bh6 Qc7 30.Qh7+ Kf8 31.Qh8+ Ke7 32.Qxg7+ Kd6 33.Bf4#;

25…Bg7 26.Be4 there is no defense

26.Be4 Rc8 27.Rh4 Kg8 28.Rxh7 Bxd5 29.Qg6+ Rg7 30.Qh5! Bxe4 31.Rh8# 1–0

Aronian and his Black Ruy Lopez.

Levon Aronian has a good score from the Black side of the Spanish Opening. There would usually be a clash on the queenside and then he suddenly swings over to the kingside through the f-file. Maybe doubled rooks, or maybe a knight on f4, then the attack comes. Here is a famous example from many years ago against no less than Magnus Carlsen.

* * *
Carlsen, Magnus (2693) — Aronian, L (2759) [C84]
Elista RUS Elista RUS (1), 27.05.2007

1.e4 e5 2.Nf3 Nc6 3.Bb5 a6 4.Ba4 Nf6 5.0–0 Be7 6.d3 b5 7.Bb3 d6 8.a4 Rb8 9.axb5 axb5 10.Nc3 0–0 11.h3

First a queenside clash.

11…Nb4 12.Ne2 c5 13.Ng3 Be6 14.Bxe6 fxe6 15.c3 Nc6 16.Re1 Qd7 17.d4 exd4 18.cxd4 c4 19.Bg5 h6 20.d5

Now Aronian will switch to the kingside.

20…exd5 21.Bxf6 Bxf6 22.Qxd5+ Rf7 23.Qd2 Ne5 24.Nxe5 Bxe5 25.Ne2 Rbf8 26.Rf1 Rf3! 27.Ra3

[27.gxf3 Rxf3 28.Ra3 Qxh3 29.Nf4! Bxf4 30.Qxf4 Qxf1+ 31.Kxf1 Rxf4 with an easily winning endgame]

27…Rxa3 28.bxa3 Qc6 29.Nd4 Bxd4 30.Qxd4 Ra8 31.Ra1 c3 32.Qb4 Qc5 33.Qb3+ Kh8 34.Ra2 Ra4 35.Re2 Rxa3 36.Qd1 Ra8 0–1

We saw a few examples of that system here in Saint Louis. Here is the most impressive.

* * *
Karjakin, Sergey (2773) — Aronian, Levon (2799) [C77]
Saint Louis Rapid (7.5), 16.08.2017

1.e4 e5 2.Nf3 Nc6 3.Bb5 a6 4.Ba4 Nf6 5.0–0 Be7 6.d3 b5 7.Bb3 d6 8.a3 0–0 9.Nc3 Na5 10.Ba2 Be6 11.b4 Bxa2 12.Nxa2 Nb7 13.c4 bxc4 14.dxc4 a5 15.Bb2 Qb8 16.Nc3 axb4 17.axb4 Rxa1 18.Qxa1 Nd8

The knight is going to f4 to anchor a kingside attack.

19.Qa4 Ne6 20.Nd5 Nxd5 21.cxd5 Nf4 22.g3 Qc8! 23.Qd1

[23.gxf4 Qg4+ 24.Kh1 Qxf3+ 25.Kg1 Qg4+ 26.Kh1 Qe2 27.Qa1 f5! the attack is already very strong]

23…Nh3+ 24.Kg2 f5 25.exf5 Qxf5

Black is threatening 26…Qg4 (with the threat of 27…Rxf3 28.Qxf3 Nf4+ winning the queen) 27.Bc1 e4 28.Nd4 Rxf2+ 29.Kh1 h5 30.Qxg4 Rxf1+ 31.Kg2 Rg1+ 32.Kxh3 hxg4+ 33.Kxg4 Rxc1. Yes, I know, where are all these tactics coming from?

26.Bc1 g5 27.Qe2 g4 28.Nd2 Ng5

Intending …e5–e4 followed by …Nf3.

29.f3 gxf3+ 30.Nxf3 Qe4! 31.Qxe4 Nxe4 32.Bh6 Rf6 33.Bd2

[33.Bc1 Nc3 winning the crucial pawn on d5]

33…Rxf3! 34.Rxf3 Nxd2 35.Ra3 Kf7 36.Ra8 Nc4 37.Kf3 Nb6 38.Ra5 Kg6 39.Ke4 Nd7 40.Kd3 Kf5 41.Ra7 e4+ 42.Ke2 Bd8 43.Ra8 Bf6 44.Ra7 Nb6 45.Rxc7 Nxd5 46.Rb7 Nc3+ 47.Kd2 d5 48.b5 d4 49.b6 e3+ 50.Kd3 e2 51.Kd2 d3 52.Rf7 Ne4+ 53.Ke1 Ng5 [Followed by …Nf3+ and Black queens first] 0–1

You know of course that there are two players who wear Barong Tagalogs in the Grand Chess Tour. One is Wesley So, and the other is Levon Aronian. He will be marrying his fiancée Fil-Australian WIM Arianne Caoili in October. My best wishes to them and hope they will live happily ever after.

The big attraction for this tournament is Garry Kasparov, of course. On Tuesday we will look at some of his games. Will he be coming back any time soon? We will see.

Bobby Ang is a founding member of the National Chess Federation of the Philippines (NCFP) and its first Executive Director. A Certified Public Accountant (CPA), he taught accounting in the University of Santo Tomas (UST) for 25 years and is currently Chief Audit Executive of the Equicom Group of Companies.

bobby@cpamd.net

DENR moving to identify more potential sources of water

THE Department of Environment and Natural Resources  (DENR) said it will classify in the next five years 183 more bodies of water according to their quality and uses, among other considerations, as part of an effort to look for more potential sources of drinking water.

Environment Secretary Roy A. Cimatu said he has been assured by the Environmental Management Bureau (EMB) that the classification of an additional 183 bodies of water will be finished by 2022.

To date, the agency has classified a total of 761 bodies of water since Republic Act 9275, or the Clean Water Law of 2004, was established.

“These water resources need to be protected and managed with care in order for them to supply us with abundant clean water for the foreseeable future,” Mr. Cimatu said in a statement on Wednesday,

The law mandates the DENR to categorize bodies of water — whether freshwater or coastal — according to their quality, area, purpose and vulnerability to pollution.

Water classification serves as a basis for planners to develop proper water quality management programs and set standards to protect aquatic life and human use of specific bodies of water.

Based on the standards the DENR has established, bodies of water can be classified as watersheds that are uninhabited or declared protected areas, water sources that require conventional upkeep, set aside as recreational areas or agriculture, and as navigable waters, among other categories. — Janina C. Lim

Nickelodeon axes Coron resort plan after outcry

MANILA — American children’s television network Nickelodeon said Wednesday it had abandoned plans for a themed resort on an island known as the Philippines’ last ecological frontier following a backlash from environmentalists.

Nickelodeon said in January that it would build an “undersea attraction and resort” on Palawan island that would let fans “interact with the brand and the iconic characters they love,” including SpongeBob SquarePants and Dora the Explorer.

The announcement triggered fierce criticism from environmental campaigners who said it would destroy the area’s world-famous marine ecosystem, and an online petition calling for the project to be scrapped attracted more than 260,000 signatures.

Viacom International Media Networks, which owns Nickelodeon, said Wednesday it had abandoned the project.

“(Viacom) and Nickelodeon will no longer be involved with this proposed development,” the company said in a statement sent to AFP.

Viacom said the decision was “mutually agreed” with its Philippine partner, Coral World Park.

The statement did not say why Viacom had pulled out and its regional spokeswoman would not elaborate when contacted by AFP.

Viacom’s initial statement in January promoted the project as its first resort in Southeast Asia that “would give a significant business opportunity for our partners across multiple platforms.”

However, Viacom and Coral World Park also highlighted the project’s “ocean conservation focus” and plans for a giant marine sanctuary.

Environmental group Greenpeace on Wednesday hailed Viacom’s decision as a victory. “We commend Viacom for heeding the call of more than 200,000 online petitioners and the offline community campaign,” Vince Cinches of Greenpeace Southeast Asia told AFP.

“They were able to dodge the bullet that has a huge reputational backlash for Nickelodeon which has been claiming it is children oriented.”

The Nickelodeon resort inPalawan was meant to be part of Coral World Park’s 400-hectare (1,000-acre) development.

Coral World Park did not immediately to respond to AFP e-mails on whether it would pursue the project following Viacom’s withdrawal.

The executive director of environmental group Save Philippine Seas, Anna Oposa, told AFP the campaign against the development would not let up.

“Our position and strategy will not change: we’ll continue to call on the local government of Coron and provincial government of Palawan to reject the project,” she said. — AFP

Peso continues to climb

THE PESO continued to strengthen against the dollar on Wednesday ahead of the Jackson Hole Economic Policy Symposium amid the absence of catalysts offshore and at home, as well as a rise in inflows brought by Japan Tobacco Inc.’s (JTI) acquisition of Mighty Corp.

The peso closed at P51.22 versus the greenback yesterday, gaining two centavos from Tuesday’s finish of P51.24 per dollar.

The peso opened the session at P51.22 against the dollar. Its intraday trough was seen at P51.32 versus the greenback, while its best showing was at P51.09-to-the-dollar.

One trader said the peso climbed against the greenback as the market is on a wait-and-see mode ahead of a gathering of global central bankers in Jackson Hole, Wyoming on Friday.

“The peso just moved sideways today, due to lack of fresh leads and as investors await on the sidelines ahead of the Jackson Hole Economic Policy Symposium,” the trader said by e-mail on Wednesday.

Reuters reported the event’s highlights would be speeches from US Federal Reserve Chair Janet L. Yellen as well as European Central Bank (ECB) President Mario Draghi.

“The downward bias might be attributed to political noise in the US and possibly some BSP intervention,” the trader noted. The Bangko Sentral ng Pilipinas sometimes steps in during the trading session to temper any sharp swings from the peso versus the dollar.

Meanwhile, another trader said the local unit ended higher against the greenback due to large inflows brought about by JTI’s buyout of Mighty’s assets.

“The main story is because there was a large inflow, which I think had something to do with the Japanese company’s acquisition of Mighty. That’s why volume was also large because the peso was bought,” the trader said by phone on Wednesday. JTI announced on its Web site on Tuesday that it would pay $936 million or P46.8 billion to buy the assets of Mighty.

Trading volume was at $949.1 million on Wednesday, jumping from the $569.2 million that changed hands on Tuesday.

For today, one trader sees the exchange rate settling at P51.15 to P51.40, while the other trader said the peso could range within P51.05 to P51.35-to-the dollar.

“The peso might appreciate amid likely weak US data on manufacturing and services,” one trader said.

Asian currencies were steady on Wednesday, supported by improving risk sentiment due to easing concerns over geopolitical risks in the region.

The dollar index, which tracks the greenback against a basket of six major currencies, was flat on the day at 93.513 after it gained 0.5% the previous session.

“Overall theme of receding risk aversion due to either US politics or US-North Korea situation, has boded well for risk sentiment, buoying equities and perhaps supporting inflows into the region,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “Apart from China, most of the equity markets seem to be up. That is acting as a backstop for Asian currencies.”

The South Korean won led regional gains, up more than a quarter of a percent against the dollar.

The Indonesian rupiah inched down despite a surprise rate cut by Bank Indonesia on Tuesday to stoke lending and consumption.

With its first rate cut since October, the Indonesian central bank became the second major Asian economy to cut after India.

The Thai baht edged lower after its custom-cleared annual exports fell short of expectations, while the Malaysian ringgit too inched down after Malaysia’s consumer price index rose at a slower pace for the fourth month in a row. — Janine Marie D. Soliman with Reuters

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