Vice-president resignation, peso's fall a blow to Estrada

Vice-president resignation, peso's fall a blow to Estrada

MANILA (Reuters): Philippine President Joseph Estrada, accused of links to gambling lords, faced the biggest crisis of his two- year rule on Wednesday when his vice-president quit the cabinet and the peso crashed to a new low.

As presidential spokesmen dismissed rumors that more cabinet resignations were in the wind, two members of Congress deserted the ruling coalition in a sign that unity within the beleaguered Estrada administration was cracking.

"We have become the laughing stock of the world," Senator Ramon Magsaysay Jr said in announcing his decision to break away.

Archbishop of Manila Cardinal Jaime Sin and a council of 75 Roman Catholic priests triggered the crisis on Wednesday when they urged Estrada to resign, saying "he has lost the moral ascendancy to govern".

In a move that stunned the country's financial markets and sent the peso on a drive through the 48-to-the-dollar level, Vice-President Gloria Macapagal Arroyo on Thursday quit as Social Welfare Secretary.

Not even Estrada's denial of receiving payoffs from gambling syndicates in a televised address to the nation and his appearance before a gathering of leading businessmen could calm market nerves.

"He must go to restore confidence...only one thing can fix this and that is his stepping down," a currency trader with a local bank said.

But Estrada defiantly rejected calls to resign, saying the campaign against him was part of a "politically motivated hatchet job" by the opposition ahead of next year's congressional elections.

"I have not received a single cent from...any form of illegal gambling. My conscience is clear. I am not hiding anything from our people," he said.

The Foreign Office said Estrada had canceled his scheduled trip to South Korea to attend the Oct. 20-21 Asia-Europe Summit meeting so he could attend to domestic problems.

"The president is in a difficult position," said Senate leader Aquilino Pimentel, who is leading a congressional probe into the accusations. "You know the saying -- rats desert a sinking ship."

Arroyo's announcement came a day before opposition legislators were to file a formal resolution seeking to impeach Estrada, a former movie actor whose 28-month presidency has been besieged by one scandal after another.

The latest involves allegations raised last week by his former political ally, Luis "Chavit" Singson, that he received 414 million pesos ($8.7 million) in payoffs from gambling lords running an illegal numbers game called "jueteng".

Arroyo is the first cabinet member to resign since the scandal broke.

"Much as I appreciate the chance that the president gave me to serve the poor...I regret that I can no longer continue to serve as a member of the present cabinet," said Arroyo in a statement released by her office. She is now overseas.

A leader of the opposition, she enjoys massive nationwide popularity and her presence in the cabinet had helped Estrada maintain an image that his administration had the backing of some of the opposition.

Within an hour of Arroyo announcing her resignation, Magsaysay, chairman of various Senate committees, announced he was quitting Estrada's party to become an independent.

Influential congressman Roilo Golez also resigned from the coalition, saying "the allegations (against Estrada) are very serious and affect the moral foundations of the presidency".

Estrada was speaking before 1,000 Philippine businessmen at a Manila hotel when the resignations struck. He avoided reporters' questions after his speech.

Almost all members of his cabinet joined him at the meeting to show they were united behind Estrada.

"There is none among us, at least at this point, even contemplating resignation," presidential spokesman Ricardo Puno said. "It's not our philosophy to abandon an ally when he is in trouble."

Philippine central bank governor Rafael Buenaventura also scotched rumors that he and members of Estrada's economic team were planning to abandon him.

Arroyo, who keeps her job as vice-president, is next in line for president should Estrada resign or be forced to step down.

Analysts have said that with the ruling coalition holding the majority in both chambers, it would be hard to get any impeachment action which requires Lower House approval.