Manila prepares to take over newly-built airport terminal

The government is preparing to take over the newly built Terminal 3 of Ninoy Aquino International Airport (NAIA) in Manila after the Supreme Court annulled on Monday a contract by a private firm to operate the facility.

"We are ready to move in and take over operations of the terminal as soon as the Supreme Court rejects the planned appeal of Piatco (Philippine International Air Terminals Co.)," Leandro Mendoza, Transport Secretary, told reporters yesterday.

On Monday, the Supreme Court declared "null and void" all five contracts awarded to Piatco by the government of then president Joseph Estrada in 1998 for the construction of Terminal 3.

The Supreme Court argued that all the Piatco contracts were contrary to public policy and violated the provisions of the country's law that allows private firms to construct and operate state infrastructure over a certain period of time before turning it over to the government.

Mendoza said that although Monday's Supreme Court decision partly settles a long-standing row between Piatco and the government, it is not yet final. Under Supreme Court rules, Piatco has 15 days to appeal the decision.

Frank Chavez, Piatco lawyer, said they will file an appeal before the Supreme Court that will oblige the government to pay the firm the cost of constructing the facility which he said was around $500 million.

President Gloria Arroyo yesterday hailed the Court's decision. "This is a major victory for good governance," Arroyo said in a statement.

"The Supreme Court decision lays the moral basis under which commercial contracts should be pursued - with due adherence to the rule of law and the public interest," she added.

Prior to the court decision, Piatco and the Philippine government had engaged in heated arguments concerning the firm's claims that the cost of the project had swelled to $657 million from its original price tag of $350 million.

Last November, Arroyo decided to scrap the government contract with Piatco.

This led the firm's German partner, Fraport AG, writing off its $312 million investment in the project early this year as it warned other foreign investors about its experience in dealing with the government.

But Arroyo dismissed this warning from Fraport as she said that national interest is above that of private entities.

"The imperatives of economic progress must be balanced against the imperatives of institutional integrity, without which a strong Republic cannot stand," said the President.