Philippines ordered to pay $176m for terminal

24th May 2011, Comments 0 comments

A Philippine court on Tuesday ordered the government to pay $176 million in compensation for seizing one of Manila airport's terminals, rejecting a higher demand by its Filipino-German builders.

President Benigno Aquino's government welcomed the ruling, with his spokesman saying it brought a long legal dispute over Terminal 3 closer to being resolved.

The court dismissed the claim of Philippine International Air Terminals Company (PIATCO), a consortium that includes German airport operator Fraport AG that it was owed $846.43M for the seized assets due to inflation and interest.

"Clearly, what defendant PIATCO actually lost was merely the value of the property condemned," read the ruling by judge Eugenio de la Cruz.

In December 2004, shortly before the terminal was completed, then-president Gloria Arroyo declared the contract PIATCO had signed in 1997 with the previous government of Joseph Estrada illegal and had the project expropriated.

Arroyo's government said there had been many breaches of contract, including the use of substandard materials and the buildings not conforming to safety standards.

It unleashed a prolonged legal battle that caused many delays in the completion of the terminal, originally built to serve 13 million passengers per year.

It opened for limited use by three local budget carriers in July 2008.

Amid the impasse and double-digit growth in Philippine aviation traffic over the past year, foreign carriers continue to use a crumbling 29-year-old terminal that was built to serve just 4.9 million passengers per year.

Two airport workers were hurt in a ceiling cave-in at the old terminal this month.

The judge said he found no basis for the consortium's bigger claim, instead affirming the government's suggested payment of $149.45 million -- plus extra costs amounting to $26.34 million -- for a total $175.79 million.

Presidential spokesman Edwin Lacierda told reporters the court's award was close to the Philippine government's original valuation of the expropriated terminal.

"It brings us one step closer to resolving the longstanding conflict that is Terminal 3," he said.

The PIATCO consortium, which had launched legal proceedings overseas against the government over the issue, could not be reached for comment on Tuesday.


© 2011 AFP

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