Crossroads (Toward Philippine economic and social progress)
Philippine Star, 17 April 2019


The payment of war damage compensation to private parties formed the bulk of the US appropriations to implement the Philippine rehabilitation act of 1946.

The amount set aside was $400 million out of the total appropriation of $520 million. The losses to be compensated was based on 1939 assessed values of wealth and income.

The prewar US dollar had a strong purchasing power, almost equivalent to 15 times the dollar of today.

Compensation landscape. A bird’s eye view of the private compensation provides a wide landscape of information.

Important companies in existence before the war – public utilities like Meralco, shipping and land transport companies, insurance companies, banks, mining companies, sugar and coconut processing companies, timber and lumber, and traditional companies in manufacturing and commerce were awarded war damage compensation.

The religious institutions, including their educational institutions, also received war loss compensation. The Catholic Church received the biggest direct compensation, headed by the Manila Archdiocese. Substantial payments were made to more than ten dioceses, the next largest going to Cebu, de Segovia, Lipa, Jarao. In much smaller scale, the Protestant churches, led by the Episcopalians and Methodists, also received compensation.

Long established Filipino families in the community – as businessmen, public officials, politicians, social leaders – received war loss compensation.

The biggest awards went to Vicente Madrigal, whose estate included, shipping, Canlubang, other associated enterprises, and personal properties.

From around more than 40 decisions affecting the claims of individual families of the war damage commission, I cite some family names that received different but substantial degrees of compensation: Locsin, Osmeña (three cases), Araneta, Rufino, Santos, Romulo, Cojuangco (four cases), Barcelon, Oppen, Jalandoni, Ledesma, Lim, Lorenzo, Montinola, Montelibano, Morato, Arroyo, Barrera, Sotto, Katigbak, Puyat, Guingona, SyCip and so on.

“Private sector war losses.” A prelude to assessment of total damage was the survey of war damage conducted by US officials immediately after war’s end. The survey included on-the-spot studies in Manila, Cebu, Bacolod, Iloilo and Zamboanga, Dagupan, Tarlac, Pampanga, Lingayen, and Malolos.

The survey was comprehensive and formed the backdrop for overall assessment of the total economic rehabilitation of program.

Manila was considered 50 percent destroyed. Personal property loss was estimated from information gathered from chambers of commerce, industrial experts and public officials.

Who were qualified for private war damage compensation? Four classes of private claimants for war damage could seek compensation: (1) individuals who were citizens of the United States and of the Philippines or of allied nations who also provided compensation for war damage; (2) individuals who served under the US or Philippine military or merchant marine service; (3) any church or religious organization; and (4) any association, trust, or corporation, except wholly owned corporations by the Philippine commonwealth.

With respect to class (1) – those concerning citizenship, allegiance to the war cause excluded persons who had collaborated with the enemy. This was headed, without mention, those officers who had served in the Japanese-sponsored republic.

The list of officers of that republic would have begun with Jose P. Laurel (president), Jorge M. Vargas (executive secretary), Claro M. Recto (foreign affairs), and Benigno S. Aquino (head, KALIBAPI [Kapisanan ng Paglilingkod sa Bagong Pilipinas]).

War damage cum rehabilitation payments. The war damage payment was designed to be disbursed as quickly as possible, but large claims required supporting evidence.

A total number of 1.25 million claims were submitted to the commission totaling $1,225 million estimates far above the $400 million appropriated. Nearly a million of these claims were up to $500 or less; about 247,000 were beyond $500 to $25,000; 1,600 from $25,000 to $50,000; 1,360 from $50,000 to $250,000; and 320 beyond $250,000.

The commission worked with great speed in reviewing and making decisions. For the large claims of damage, the commission paid 52 percent of the formal claims submitted.

Such speed of administration required quick decisions and generous leniency especially in the case of the very small claims. Under such pressure, it was heyday for the local press to comment on reports of fraudulent and anomalous claims.

The commission reported the following final payments by class: for the smallest claims ($500 or less), $131.7 million; for the group $500 to $25,000, $130.1 million; for $25,000 to $50,000, $12.9 million; for $50,000 to $250,000, $29.4 million; and finally, the largest, above $250,000, $83.3 million.

The commission (in its final report), claimed that the total compensation of $103 million to claims that exceeded $25,000 produced a total economic rehabilitation of $513 million, or five times as much expansion of income and output.

War damage compensation by industry. Significant private sectors of the economy received awards of compensation. The more prominent are as follows: sugar centrals, $13.4 million; mining companies, $18.0 million; public utilities, $9.8 million; hospitals, $8.0 million; schools and religious organizations, $3.7 million; manufacturers and dealers, $23.0 million; and agriculture, $33.8 million. Add to these the numerous under $500 small claims made that amounted to $1.2 million.

Impact on economy of war damage compensation. Some fifteen years ago, I studied the archives of the Philippine War Damage Commission in Washington DC.

I have not finished the paper that I had begun to write years ago, but some snippets of that study include what I write in this column.

The payments of war damage quickly helped a veritable list of prewar individual companies, institutions, associations, families, and individuals. Companies and individuals that are preeminent today and were as important then received loss compensation.

A large amount of compensation went to American and Filipino citizens. And Chinese. All these three nationalities were heavily invested in the Philippines at break of war.

Second, export industries benefited were mainly owned by American and Filipino companies. These were the sugar-and coconut-based industries, the mining companies and those related to other export industries and those to construction and services industries.

Finally, the early Philippine economic recovery was facilitated by the return of the public utilities in transportation, electricity, and communications. This showed in the expansion of the supply of goods.

Also, the war damage compensation strengthened private income streams coming from war damage compensation. In addition, secondary streams of incomes arising the expenditure of war damage recipients enlarged aggregate demand in the economy at large.