DOF reviews P800-M fine for scrapping lake dredging

MANILA, Philippines - The Department of Finance (DOF) is reviewing the ruling made by a World Bank (WB) body ordering the Philippine government to pay P800 million in compensation for the cancellation of the P18.7-billion Laguna Lake Rehabilitation Project during the Aquino administration.

Finance Secretary Carlos Dominguez III said the International Center for the Settlement of Investment Disputes (ICSID) favored the Belgian dredging firm Baggerwerken Decloedt En Zoon (BDZ).

Sought for comment, former president Benigno Aquino III said he has yet to read the decision.

But he noted the Belgian firm was the same one that dredged the Pasig River before his tenure as president and the Department of Science and Technology determined that at most, only 40 percent of the project was done and the allocation had all been used.

ICSID ordered the Philippine government to pay P800 million plus interest to BDZ for all the losses incurred by the firm for the project’s cancellation.

“We just got the documents a few days ago so we’ll go over it carefully and we’ll see what legal remedies there are. If we have to pay, we will pay,” Dominguez said.

He said the Philippine government has a track record of paying its obligations from decisions and rulings made against it.

“As President Duterte has said, we will always honor all our obligations,” he said.

In April of last year, the Supreme Court affirmed its September 2015 ruling for the government to pay $521 million in compensation and interest to the Philippine International Air Terminals Co. Inc. for building the Ninoy Aquino International Airport Terminal 3.

“The payment of the decision against us with regard to the NAIA 3, that’s already been paid,” Dominguez said.

For his part, Environment and Natural Resources Undersecretary Demetrio Ignacio said government lawyers would have to intervene since the decision is a legal issue.

“It would be prudent to consult the right people first so we’ll know what is the next thing to do,” said Ignacio, former undersecretary for policy and planning and now undersecretary for staff bureaus of the department.

Meanwhile, the Laguna Lake Development Authority (LLDA), an agency under the Department of Environment and Natural Resources, (DENR) refused to comment on the matter.              

LLDA public relations officer Mureen Tolentino said the LLDA is not the best agency to make a statement on the recent ruling by the ICSID.

In scrapping the project, Aquino said the P18.7-billion project would involve the removal of silt from one portion of the lake to another and that if the objective was to increase the water holding capacity of the lake, this would not do the job.

BDZ filed a P6-billion lawsuit for breach of contract against the Philippines after the deal was scrapped unilaterally by the government in 2010 after the Aquino administration identified it as a “midnight deal” of the previous administration.

Earlier, then Laguna Rep. Dan Fernandez asked Aquino to immediately investigate the alleged “midnight deal” of the Arroyo administration. Fernandez said the project was awarded without competitive bidding by the DENR.