January 21, 2007

Ike Señeres

The right to do wrong

Thousands of jobs are on hold as the controversy over the opening of NAIA 3 rages on. By comparison, while we might need a charter change as much as we need a hole in the head, there is no question that we need a bigger and more modern air terminal regardless of who is going to own or operate it. In reality, it is not just the jobs that are directly related to the airport that are on hold, all other jobs that could have benefited from more tourist arrivals are also on hold, as everyone knows that a better and more friendlier air terminal would possibly attract more tourists.

While the political pundits are still debating on whether the action of the Congress majority is right or wrong, there is no question that in a recent report, the government was caught in the act, while committing a wrong that it later on admitted in its own legal arguments. In a grand irony that could perhaps happen only in the Philippines, the government had admitted that it had infringed on the rights of a private company as it tried to get a stronger foothold in the NAIA 3 case. Ironic, because in this modern world where the government is expected more than ever to protect the legal and intellectual rights of private companies and private persons, it had to admit that indeed it had infringed on the rights of others, perhaps willingly and consciously.

A few months back, the government was also accused by the opposition of committing “state terrorism”, a charge that is still unproven, but is very disturbing nonetheless, because it portrays the government of doing an illegal act that is supposed to prevent. As if that action was not scandalous enough, the government this time is not just accused of committing a wrong it, it had already practically confessed to the wrongdoing. Given the fact that the government is also duty bound to protect and preserve its own interests, the question now hangs, whether the government has the right to do wrong, for the purpose of upholding its own rights.

While the government was already caught in an uncompromising situation as it admitted its own act of infringement, the circumstances surrounding the wrong action could be said to be doubly embarrassing, as it was committed abroad in full view of a highly critical global environment, more so considering the fact that there are foreign companies that are involved in the controversy. According to reliable reports, the controversial admission was contained in the “ Defense Submission and Counterclaims” filed by the government lawyers on October 2, 2006 with the International Court for Settlement of Disputes (ICSID) in Washington, D.C. To be more specific, the government admitted for the first time that “it had infringed on the rights of Asia’s Emerging Dragon Corp. (AEDC) as the original proponent of the NAIA 3 project” and that “the bidding process which the Philippine International Air Terminals Co. (PIATCO) won was attended by anomalies”.

The Philippine legal panel that appeared before the ICSD is composed of Solicitor General Eduardo Nachura, retired Supreme Court Justice Florentino Feliciano and Carolyn Lamm of the U.S. – based White and Case LLP. The panel said that then Department of Transportation & Communications (DOTC) Secretary Pantaleon Alvarez, the Procurement, Bids and Awards Committee (PBAC) Chairman for the project “exerted efforts to get Jeff Cheng as investor into the AEDC but which the corporation rejected saying it has enough financial resources to fund the construction and operation of the proposed terminal”.

While this controversial project had already gone through several twists and turns, it will be remembered that thereafter, a joint venture known as PIATCO headed by Cheng which challenged AEDC’s unsolicited proposal. To cut a long story short, PIATCO ended up winning the Swiss challenge and getting the concession for the terminal from the PBAC headed by Alvarez in violation of public bidding rules, the panel reportedly added.

Although the government lawyers were expected to argue for their own defense whatever it takes to do it, it is surprising that it has implicated a former government official in an accusation that could boomerang against its own interests in the long run. This possibility emerged as the government lawyers said that the award, which resulted from the alleged collusion between the PBAC and PIATCO was “hugely favorable to the Cheng consortium and extremely disadvantageous to the government”. It is rather difficult to predict what is going to happen next, but it is easy to see that in trying to defend its own position, it has strengthened the AEDC position.


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