What Went Before: The Naia 3 saga

The Ramos administration awarded the contract to build the Ninoy Aquino International Airport Terminal 3 (Naia 3) to the consortium of Philippine International Airport Terminal Co. (Piatco) and German firm Fraport in 1997.

But President Gloria Macapagal-Arroyo voided the contract in 2002 because of allegations of irregularities.

For more than a decade, the Philippine government and Piatco fought a legal battle over the Naia 3 project, delaying the opening of the terminal. The project was mothballed for six years.

On Dec. 21, 2004, the Office of the Solicitor General filed an expropriation case in the Pasay Regional Trial Court to enable the government to operate the terminal at the soonest time possible. The Pasay court issued a writ of possession to the government, but ordered it to pay Piatco P3 billion ($53.57 million) as down payment on compensation still to be determined.

Piatco went for separate arbitration in the Singapore-based International Chamber of Commerce (ICC) tribunal.

On Aug. 23, 2006, the ICC ordered the Philippine government to return the project to Piatco until a valid writ of possession was issued by a domestic court. It said the writ released by the Pasay court in 2004 could be considered valid only if there was proof that the P3-billion down payment had been paid.

The next month, Piatco received P3 billion from the government, clearing the way for the Manila International Airport Authority to work on the terminal for its opening. Naia 3 partially opened in 2008, operating at about 50 percent of capacity.

On May 23, 2011, the Pasay court ordered the government to pay Piatco $175.79 million (or about P7.6 billion) less the P3 billion down payment that the government had already paid to Piatco as compensation.

Piatco’s damage claim in the ICC was rejected but the builder of Naia 3 asked the High Court of Singapore to reverse the ruling of the tribunal. Its petition was also denied by Singapore’s High Court on Nov. 15, 2011.

In August 2013, a Court of Appeals ruling modified the order earlier issued by the Pasay court. The appellate court ordered the government to pay Piatco “just compensation” of $371,426,688.24 (about

P16.2 billion), an amount much higher than what the Pasay court had ordered.

The appellate court later amended its ruling, saying the annual interest on the $371,426,688.24 compensation should be 6 percent annually—not 12 percent, which the court initially set—until it was fully paid and once the decision became final.

While the government appealed the decision of the Court of Appeals, Naia 3 finally operated at full capacity starting August 2014.

In October last year, the Court of Appeals said the government may not exercise full ownership rights over Naia 3 until it had paid in full the P16 billion in just compensation, a ruling the appellate court affirmed early this year.

Apart from the case against Piatco, the government also faced an arbitration case filed by Fraport, Piatco’s foreign partner, in the International Center for Settlement of Investment Disputes (ICSID), the arbitration arm of the World Bank based in Washington.

The arbitration was concluded in December last year and the ICSID ordered Fraport to pay the Philippine government $5 million in damages for violating the Anti-Dummy Law.—Inquirer Research

Source: Inquirer Archives