It’s like the Pacquiao-Bradley match of 2012, when the People’s Champ landed the harder punches, to lead most of the 12 rounds and nearly knock down the dazed foe many times, only to be declared by the aged judges the loser by unexpected split decision. This 12-year bout over the NAIA-3 was as lopsided.
The government had found blatant graft in six revisions of the original build-operate-transfer contract. On investigation, more crimes were uncovered in the partnership of the Filipino contractor Piatco Inc. and German airport enterprise Fraport AG. Worse, unwarranted construction scrimping tended to compromise safety and convenience. The US Federal Aviation Administration and the International Air Transport Association warned of sanctions if the flaws were left uncorrected. When the contractors refused, the government expropriated the 96-percent finished facility in 2003.
Piatco sued before the International Chamber of Commerce in Singapore, and Fraport at the International Centre for Settlement of Investment Disputes in Washington DC. The government won both cases by proving Fraport’s dummying in owning 61.44 percent of the partnership, in breach of the constitutional limit of 40 percent on foreigners in public utilities. Three injurious collapses of the ceiling, frequent breakdowns of electronic and electrical systems, and the man-made sinkhole inside the cargo hall further bolstered the government’s enumeration of hundreds of shoddy works.
What remained was the determination of the just compensation for the expropriation. In 2011 the Pasay City court formed a Board of Commissioners that computed it at $376.2 million, plus 12-percent interest per year, compounded till paid. But the judge rejected it and upheld instead the government’s $149.5-million audit of Piatco-Fraport’s duly receipted expenses, plus minor interest. Since the government earlier had advanced $59.8 million, only $116.4 million was left to be paid. Meanwhile, Fraport dropped out, opting to write off its bad investment, on say-so of its 55-percent German state reps.
The government’s winning streak soured when the remaining Piatco ran to the Court of Appeals. In 2013 three magistrates awarded the latter $371.4 million, including six-percent interest.
Unsatisfied, Piatco elevated to the Supreme Court. The government acceded, as it stood pat on its much lower computation.
Last week the SC ruled en banc, granting Piatco an even higher $510.3 million (P25 billion). The vote was a surprisingly unanimous 10-0, with five justices recusing.
Broken down, the amount consisted of $327-million principal, plus 12-percent interest, $243 million until Dec. 2014. Deducted was the $59.8-million government advance. The principal referred to the justices’ valuation of the “replacement cost,” that is, the amount to be spent to build a similar structure based on market prices at the time of taking.
The ruling left government lawyers stunned. All Solicitor General Florin Hilbay could mumble, shaking his head, was that “we’re still looking at our options.” Many in his litigation staff wept. Their victories with US lawyers in the Washington DC, Singapore, and Pasay City tribunals had been wiped out. To notch those, they had had to bear the killings of a deputy solicitor and confidential assistant-daughter, then of a judge. Although scared, they had fought on, spending sleepless nights in country and abroad to formulate the best legal arguments the next day. They also had painstakingly traced money laundering via the British Virgin Islands. Those consisted of multimillion-dollar bribes to approving Philippine government officials, and Piatco-Fraport executives’ illegal payments to themselves. They were morally convinced that Piatco deserved only what its financial books recorded as expenses. And the dollar interest rates in those years hovered at only between 1.25 to 3.5 percent.
But the Supreme Court’s word is the law. If it says the Filipino taxpayers must pay four-and-a-half times more, then so be it.
“The government is hereby ordered to make direct payment of the just compensation due to Piatco,” the SC declared. Otherwise, the interest will continue to accrue. The government would continue to operate the NAIA-3; Piatco would remain the owner until fully paid.
Still an appropriation from Congress is needed for such payment. If Malacañang, the Senate, and House of Reps disagree with the SC, they have options. One is to apply values engineering to re-compute, and tell Piatco to take it or leave it.
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Speaking of NAIA, departing Balikbayans must beware of the “Laglag-Bala” extortion racket. At the baggage x-ray, crooked inspectors would insert live bullets or shell into outside pockets of bags, then accuse the owner of terrorism. The modus operandi has been so perfected that the inserter can do it with hands behind his back, to avoid detection by ubiquitous security cameras. Afraid of criminal charges, derogatory records, and flight offloading, victims usually give $10 upwards.
Best to get their names and cell phone-photographs, and send immediately to your friends or relatives, who can then report to authorities and the media.
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And speaking of constructors, last Friday would have been the 96th birthday of one of the best of them, the late Engr. Felipe F. Cruz. He was my source for many exposés of public works anomalies, if not a patient explainer of how devious constructors cheat via substandard materials and workmanship. I learned much from “Tata FF”, not only about government projects but also smart personal finance and life in general.
“Tata FF” was the builder of many Philippine highways, bridges, interchanges, fly-overs, seaports, and airports. A government scholar in civil engineering at the U.P.-Diliman and in the US before the war, he was obliged to design and build public infrastructures at economy rates. After the tie-down period to recompense government for his schooling, he moved on to private projects that made him the most sought-after constructor. Although he became a billionaire, he remained frugal. I remember our several consultation breakfasts of pandesal with quesong-puti or sardinas, half of which he would share with company.
It was only after his passing two years ago that I found out that his wife is a cousin of my mom. I wonder now if I should have called him “Tito FF” and even borrowed a million bucks, but he would surely have turned me down with a wise financial warning that relatives are poor risks.
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Catch Sapol radio show, Saturdays, 8-10 a.m., DWIZ, (882-AM).
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