POSTSCRIPT / December 23, 2004 / Thursday


Philippine STAR Columnist

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Takeover of NAIA-3 an overdue gov't move

STORM’S OVER?: For a while there, the throbbing mass that turned out Wednesday for the burial of movie idol Fernando Poe Jr. threatened to erupt into another People’s Revolt with incited FPJ supporters assaulting the seat of power by the Pasig.

The Arroyo camp itself betrayed its worst fears of this dire scenario when it circled Malacanang with troops in full battle gear, barbed wire entanglements and steel container vans to block any attempt of Poe followers to rush the Palace.

But the anxieties of the Arroyo camp appear to have abated, after the potentially killer typhoon FPJ exited without rattling the shuttered windows of Malacanang.

Considering our notorious short span of attention, the widespread prediction has been that one week after FPJ is buried, the big to-do over him would have been forgotten. It seems we are now headed that way.

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RALLYING FIGURE: Besides, for such a political storm to return and gather enough cyclonic winds to blow the roof off the Palace, the opposition must have a rallying figure, some Joan of Arc on a white steed, sword raised in defiance.

There is no such rallying figure at the moment.

Former President Erap Estrada, despite his fighting speech at the necrological services for his bosom buddy at the Sto. Domingo church, can no longer be that figure.

Neither can actress Susan Roces, the widow of FPJ, play that role despite attempts to massage her political persona to presidential proportions.

If presidential elections were to be held next month, baka puede pa. For such a touch-and-go battle, Susan could be packaged quickly as opposition standard bearer almost in the same manner that Cory Aquino emerged as the slain Ninoy Aquino’s political heir in 1986.

But the next presidential elections will be in 2010 yet. Susan cannot run that long course.

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DECISIVE MOVE: The government’s takeover this week of the Ninoy Aquino International Airport Terminal 3 (Naia-3), estimated to cost from $400 million to $650 million, was a decisive move that was long overdue.

It is against public interest to allow the terminal, lying idle on public land beside the ageing international airport in Pasay City, to rot away while the government and its builder quarrel over legal points in their build-operate-transfer contract.

In May 2003, the Supreme Court declared as illegal the contract signed with the Philippine International Air Terminals Co. (Piatco) to build and manage Naia-3. The SC ruling laid the basis for President Arroyo’s rescinding the contract last year and now moving to take over the terminal.

Expropriation of Naia-3 went into high gear this week after a Pasay City Regional Trial Court issued a “writ of possession” for the property.

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OPENING SOON: Transportation and Communications Secretary Leandro Mendoza said the correction of defects and deficiencies of Naia-3, expected to cost $15 million, would be fast-tracked to ensure the terminal’s opening in six months.

Heavily armed troops and special police squads had been sent to Naia-3 to ensure government work is not hampered. Presumably, the government did not want a see again Piatco security guards barring officials from entering the building.

The government plans to close the old Naia-1 once Naia-3 is operational. The other facility, the Centennial Terminal that Philippine Airlines uses exclusively for its domestic and international flights, would become the new domestic terminal.

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ARBITRATION: Government takeover is being pressed despite the case having been submitted to international arbitration. Piatco has sought the intervention of the International Chamber of Commerce in Paris.

The Philippine government and Germany’s Fraport AG, which owns substantial shares in the Piatco consortium, have also filed cases with the International Center for Settlement of Investment Disputes in Washington, DC.

As a last resort, arbitration is proper only if there is a prolonged impasse in resolving the dispute. There is no such impasse, since the case is moving — the most significant movement being the Supreme Court’s invalidating the Piatco contract and the latest being a lower court’s issuing a writ of possession or an order to take over Naia-3.

Appeals on decisions of Philippine courts will have to be filed with the same court rendering the decision or with a higher or appellate court, certainly not immediately with a foreign arbitration body.

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JUST PAYMENT: Expropriation is a well-defined and time-tested procedure arising from the state’s valid exercise of its power of eminent domain. The process normally proceeds without any serious legal hitch provided there is due process and just compensation, among other requirements.

With due process already being observed, the only remaining big question, it seems to me, is compensation, or how much Piatco should be paid.

The consortium is demanding a $530-million payback. To see how bloated this figure is, note that Piatco signed a deal with a Japanese contractor to build the terminal for only $323 million. Where did the difference come from?

The government has announced that it was ready to pay a P3-billion down payment to Piatco while the two parties talked. The money has been deposited with the Land Bank.

The government suggested earlier that three independent and reputable foreign engineering appraisers assess the cost of Naia-3, saying it was willing to pay the average of the three estimates. Piatco rejected the idea.

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PADDED EXPENSES: Certainly, Piatco should not expect to be paid back any amount illegally spent or given out (assuming there were such sums), such as commissions or kickbacks to public officials, payments for work not actually done, or padded and bogus expenses.

In fact, the Arroyo administration should also prosecute several ranking officials who appear to have had a hand in inserting illegal and disadvantageous contract provisions and collecting unwarranted huge sums.

For a while last year, the government’s case suffered a public relations setback when rumors went around that some persons with Palace connections were maneuvering to cash in on the project by working out a compromise for a fat fee.

The government insists that the most that Piatco can be paid is the cost of the contract as originally stipulated when it was signed in 1997. One reason for this is that the Supreme Court has declared as illegal some contract revisions entailing additional costs.

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FRAPORT OUT: Nor is the government to be expected to pay Fraport AG, a German stakeholder in Piatco that is demanding refund of its alleged $425-million exposure in the project.

The Philippine government signed the contract with Piatco, not with Fraport which is a distinct and separate corporate entity. What Fraport can do is go after its Piatco partners, while Piatco goes after the Philippine government.

Fraport, a corporate vehicle of the German state of Hesse, may even get into legal and political trouble if it presses its claims against the Philippine government.

The Germans have shown by their own submissions to arbitration and other bodies that they had pumped into Piatco excessive funds that would dilute the 60-percent minimum share that the Filipino owners of Piatco are required to put in under the law.

Are there persons in Piatco who are Fraport dummies?

Piatco’s hold on the project weakened when revisions on its original contract and its demand for refunds were put under serious question. The case further got complicated when the terminal it built was found to suffer several serious deficiencies.

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(First published in the Philippine STAR of December 23, 2004)

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