President Gloria Macapagal-Arroyo stood by her administration's no-ransom policy, and backed her defence secretary and chief of staff as controversy on alleged collusion between the military, the police and the hostage-taking Abu Sayyaf continued to hound her administration.

"If we have a ransom policy, the first thing will have been for the ransom of Gracia and Martin Burnham, (two American missionaries), because we are such a good friend of the U.S.," said Arroyo, in a press conference.

And then retorted, "That's his interpretation," when asked to comment on an allegation by Senator Serge Osmena that the government had no real ransom policy.

Arroyo also stood by Defence Secretary Angelo Reyes and Chief of Staff Gen Diomedio Villanueva who were accused by Osmena of keeping $98,089 of the alleged $333,333 ransom payment given by the family of businessman Reghis Romero, after he and 19 other tourists were abducted by the Abu Sayyaf from a resort in Palawan in May.

"I am the appointing officer. I am not asking for their resignation. I have full faith and confidence in them," said Arroyo.

"He should say who is this somebody from Malacanang (who knew about the alleged ransom payment). I would rather know that than keep face," said Arroyo in response to Osmena's allegation that she knew about the whole thing in advance, but did not want anyone to know about it since she might lose face.

Meanwhile, Reyes dared Osmena to prove his allegations.

"We have to fight back, if we don't, silence could be misconstrued as acceptance. We have been working hard in the field with limited equipment and arms to crush the Abu Sayyaf," said Reyes.

"We have lost men. Our soldiers have sacrificed their lives, and yet we get this kind of criticism," added Armed Forces spokesman Brig Gen Edilberto Adan.

"I dare him to prove his case in court within six months, and get the conviction. If he cannot do that he should be the one to resign," said Reyes.

"I don't have to prove anything. I am just a witness telling the people what I know. I'm not the prosecutor. I'm doing my job," Osmena said.