Case in point: The decision of the Pasig Regional Trial Court to award the Philippine International Air Terminal Co. (Piatco) the sum of $175.79 million, less the P3 billion already paid by the national government, as just compensation for the expropriation of the controversial Terminal 3 of the Ninoy Aquino International Airport (Naia 3). An unhappy Piatco has already said it will elevate the matter to the Court of Appeals; an equally unhappy Sen. Joker Arroyo, who as chair of the Senate blue ribbon committee several years ago probed the allegations of wrongdoing that swirled around Naia 3, also cried foul.
Piatco, which sought a total of $846.43 million from the government, found the RTC decision underwhelming. “The amount the judge awarded is a pittance. The decision is totally unacceptable to the investors. Legal experts on expropriation easily see loopholes in the decision. It runs roughshod [over] certain basic legal rules and procedures,” a company statement read.
This is an understandable position. The amount awarded is less than one-fourth of the company’s valuation, and it already includes payments previously made. Piatco also contends that the RTC ignored the evidence it presented to support its claim.
Arroyo’s stance is less comprehensible. “The Supreme Court declared the contract null and void,” he said. “The Senate blue ribbon committee also declared it null and void. Yet we are going to pay $176 million.” But Arroyo forgets that the same Supreme Court, even while negating the contract, ordered the national government to pay Piatco just compensation, for expropriating Naia 3 in 2005. That is in fact why the sum of $175.79 million (about P7.5 billion at an exchange rate of P43 to the dollar) is even less than it appears, because the government had already paid P3 billion—precisely in compliance with the Supreme Court ruling.
The maximalist reactions of both Piatco and Senator Arroyo provide us an opportunity to draw important lessons. The controversial company sought to place the decision in greater context. “It is bound to imperil the much ballyhooed ‘Public-Private-Partnership’ campaign of the Aquino administration to lure private investors to fund its development projects,” its statement read. We do not agree. In fact, the original Naia 3 story was a cautionary tale about investment projects gone bad; the court’s decision is actually a strong signal that the government can set things right. This is an incentive for more investments, rather than less.
Arroyo said he was dumbfounded. “The land is government-owned, it’s only the building that is needed. So what happened now to all the illegalities that were committed by Piatco?” He also asked: “Are they being rewarded for having entered into contracts that have been voided? This is tragic.”
In fact, Piatco is not being rewarded at all. It is merely being paid for what it actually built—at more reasonable costing, rather than the obviously inflated claim it submitted.
In other words, the issue is not the government-owned land, but the building that was left on it. The contract may have been voided, but Terminal 3 was built. It wasn’t completed, but after some additional work, it is now in use. To the credit of both the current and the past administration, the question of just compensation was never an issue.
Just compensation is tricky to define, but in this particular case we think it should not be construed to mean an excuse for Piatco to make a profit off its misfortunes (as the company clearly intends, from its exaggerated claim, and as Arroyo clearly wants to prevent); not even to recover its costs in full (something Arroyo is justifiably against); but only to recover its costs in part, as determined by the courts. That ought to be penalty enough.