"Fraport cries foul; says expropriation of Manila airport terminal illegal"

Thursday, December 23, 2004

Fraport cries foul; others hail expropriation of NAIA-3 
The Philippine Star


Fraport AG of Germany, the company which operates the Frankfurt airport,
accused the Philippine government yesterday of breaking the law in
expropriating the Ninoy Aquino International Airport Terminal 3 (NAIA-3)
that the firm helped build in Parañaque City. 

"Fraport considers the action of the Philippine government as a further
flagrant breach of the law," the German company said in a statement from
Frankfurt. 

But the government said its takeover of the Ninoy Aquino International
Airport Terminal 3 (NAIA-3) was legal. 

"The constitutional move of the government can only signal better public
service and convenience and greater business confidence," President Arroyo’s
spokesman Ignacio Bunye said. 

"The will, welfare and interests of the people will prevail," he added.
"This is a historic day for the political and economic prestige of the
Philippines." 

Fraport, in its statement, reiterated its demand for financial compensation
in a long-running legal battle that is currently before the World Bank’s
International Centre for Settlement of Investment Disputes (ICSID). 

It said it wanted a minimum of 350 million euros ($465 million) and would
"vigorously" pursue its claim. 

The German company owns a 30-percent stake in the Philippine International
Air Terminals Co. (Piatco), a consortium set up to build and operate NAIA-3.


In a surprise move, the government announced on Tuesday afternoon that it
was taking over the controversial terminal, which it hoped to open next
year, and offered a P3-billion ($53.57-million) downpayment to Piatco. 

But Fraport dismissed the downpayment as insufficient. 

Piatco is actually seeking a compensation amounting to $530 million but Sen.
Mar Roxas, chairman of the Senate committees on trade and commerce and on
economic affairs, has maintained that the amount is "excessive, inflated and
grossly disadvantageous to the government and the taxpaying public." 

He said the government is prepared to pay only $360 million, which is the
amount of the original bid. 

"I think the government should not pay a single centavo or peso more than
what the terminal is worth. If we know the contract value is only $350
million, why should we pay more?" he asked. 

Roxas recalled that to settle the dispute, the government had offered to get
three independent and reputable foreign engineering appraisers to provide
reasonable estimates as to the cost of NAIA-3. 

The government, he said, was then willing to pay any amount representing the
midpoint of the three estimates, but Piatco rejected the idea of involving
independent appraisers. 

"This is the same adopted by the United Nations in determining a project
cost — to get varying estimates from multiple appraisers and then peg the
cost at the midpoint of those estimates," Roxas pointed out in a statement.
Legal Tussle 
The legal counsel of Piatco accused the government yesterday of railroading
the court proceedings at the Regional Trial Court (RTC) in Pasay City as
they took possession of NAIA-3 facilities. 

"The government of the Republic of the Philippines railroaded the
proceedings before the RTC of Pasay City. They made it appear that the
service of notice to Piatco done at 3 p.m. was legitimate and a sincere
one," former solicitor general Francisco Chavez, Piatco’s legal counsel,
said in press statement. 

Chavez decried that while the writ of possession had not been officially
issued, several members of the Philippine National Police-Aviation Security
Group (PNP-ASG) and members of the media were already converging at the
NAIA-3. 

At around 5 p.m., government representatives entered the NAIA-3 premises,
which, he said, was a clear case of trespassing into private property. 

The Arroyo administration, in a decision upheld by the Supreme Court in
2002, annulled the contract awarded to Piatco by deposed President Joseph
Estrada to build and operate the new terminal. It claims that the contract
went against the interests of the Philippines. 

Chavez is asking though why the government refuses to return the P780
million that Piatco paid pursuant to the contracts which it claims are null
and void. 

"The government has malversed Piatco’s P780 million and now it has stolen
NAIA Terminal 3," Chavez charged. 

Meanwhile, Executive Secretary Eduardo Ermita yesterday gave assurances that
no private parties or vested groups were behind the government’s takeover of
NAIA-3. 

The concerns were raised following the government’s payment of a
P3.1-billion bond deposit for the expropriation and the enforcement of the
writ of possession for the property. 

Ermita explained that the government had taken these moves with prior budget
provisions. 

Even opposition senators welcomed the government’s takeover of the
$650-million facility. However, Senate Minority Leader Aquilino Pimentel Jr.
said that the move may be justified only if it is prepared to grant just
compensation to the project’s investors. 

"Government’s takeover of NAIA-3, if it is meant to run the terminal, is a
good preliminary move. But will investors be paid what is due them? Is
expropriation the proper remedy?" Pimentel asked. 

Takeover Supported 

Meanwhile, ten of the tourism industry’s biggest associations announced
their full support to Malacañang’s move to take over NAIA-3. In a letter
addressed to Mrs. Arroyo, they said the move was timely "in view of the
continued increase in international tourist arrivals, especially during the
holiday season." 

The new terminal, they added, would allow the country to accommodate more
tourists in the country. 

The signatories were representatives of the Federation of Tourism Industries
of the Philippines (FTIP), Hotel and Restaurant Association of the
Philippines (HRAP), Philippine Travel Agencies Association (PTAA), The
Philippine Hotel Federation (TPHFI), Philippine Association of Convention
Exhibition Organizers and Suppliers (PACEOS), Hotel Sales and Marketing
Association (HSMA), Philippine Tour Operators Association (PHILTOA),
Association of Car Rental Companies Inc. (ARCI), Freedom to Fly Coalition
(FFC) and the Manila Japanese Travel Agents and Hoteliers Association
(MJTHA). 

The business community also welcomed the takeover of the disputed facility
and said it hopes that government can pave the way for the operation of the
facility in the near future. 

Ramon del Rosario, of the Philippine-US Business Council, said that NAIA-3’s
opening would help stimulate renewed investor interest in the Philippines. 

Although business leaders generally frown on an expropriation, Sergio
Ortiz-Luis, president of the Philippine Exporters Confederation Inc., said
the delay in the arbitration and settlement of the dispute has brought
embarrassment to the government and the country as a whole. 

The Manila Business Club for its part said that Mrs. Arroyo and Trade and
Industry Secretary Cesar Purisima should be supported on their decision on
NAIA-3 so that it can "begin to serve the needs of Filipino travelers and
foreign visitors without further delay." 


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