Gov’t must pay Piatco over $500M, SC rules

MANILA, Philippines – Government must pay Philippine International Air Terminals Company (Piatco) over half a billion dollars in just compensation for the takeover of the Ninoy Aquino International Airport Terminal 3 (NAIA-3), the Supreme Court (SC) ruled.

Manila’s largest air terminal had been the subject of a legal dispute since the Philippine government seized it in 2004, citing breach of contract and failure to conform with safety standards.

The High Court ordered government to pay a total of $510.3 million to the builders consortium which consists of Germany’s Fraport AG and partner Piatco, which sought compensation.

The amount includes $327 million in replacement cost, plus $243 million in interest until December 2014, the court said. It also deducted $59.4 million that the government had already paid to Piatco in September 2006.

The replacement cost refers to the amount required in the replacement of a previous improvement or structure that is based on market prices at the time of taking.

“The government is hereby ordered to make direct payment on just compensation due to Piatco,” court spokesman Theodore Te said during a press briefing.

The 144-page ruling was announced during the briefing on Wednesday, September 9.

Lower courts

The SC decision partly modified an earlier ruling by the Court of Appeals (CA) Third Division ordering the government to pay Piatco $371 million. 

The amount earlier fixed by the CA already included a 6% interest per annum.

The CA ruling itself already amended a Pasay Regional Trial Court (RTC) decision on May 23, 2011 which ordered the government to pay Piatco a net of $116.35 million, without interest.

The SC ruled that the Pasay RTC decision was valid in so far as due process is concerned.

The $600-million terminal – designed to decongest air traffic in Manila – was mothballed for 6 years over legal and structural issues. Partially opened in 2008, the airport was also designed to handle 13 million passengers a year with its 140 check-in counters and 188 immigration counters.

It was in 1997 when Piatco and Fraport bagged the contract to build NAIA-3, but the Philippine government nullified the contract in 2002 over allegations the consortium violated the Anti-Dummy Law. 

NAIA-3 was designed to be the country’s prime international airport terminal, helping ease congestion at the main terminal 1. It opened in 2008 at half capacity. – with Agence France-Presse/Rappler.com