Piatco has hidden direct government guarantees, says lawyer

The government’s decision to pay the Philippine International Air Terminals Co.’s (Piatco’s) debts in case of a loan default is, "by whatever name, a prohibited direct government guarantee," companies providing ground services at the Ninoy Aquino International Airport have charged.

In a memorandum submitted to the Supreme Court last week, seven airport service providers accused Piatco of using the terms "termination pay" and "attendant liabilities" to hide the fact that what it has secured is a "direct government guarantee" prohibited under the Build-Operate-Transfer (BOT) law.

As an "unsolicited proposal," lawyer Francis Lim, lead counsel of the airport service providers, stressed, Piatco’s NAIA Terminal 3 project is not entitled to a "direct guarantee" from the government.

The parties to the case are Miascor Groundhandling Corp., DNATA-Wings Aviation Systems Corp., Macroasia-Eurest Catering Services Inc., Macroasia-Menzies Airport Services Corp., Miascor Catering Services Corp., Miascor Aircraft Maintenance Corp. and Miascor Logistics Corp.

The NAIA Terminal 3 project was an unsolicited proposal submitted to the Ramos administration by six of the country’s wealthiest businessmen on Oct. 5, 1994.

Piatco managed to wrestle the project away from the six "taipans" with its own proposal that, over the years, had been changed into an entirely new contract that placed much of the financing burden on the government’s shoulders.

In Piatco’s own "amended and restated concession agreement," he said, there exists provisions on "termination pay" and "attendant liabilities" that essentially require the government "to assume responsibility for the repayment of debts directly incurred by (Piatco) in implementing the project."

Lim added that Piatco has yet to explain why it deleted the phrases "outstanding in the books" and "actually used for the project," which limited the debts incurred by Piatco that the government will pay, in its amended concession agreement.

He said without these phrases, Piatco can, in effect, force the government to shoulder even its "undisclosed loans," including those that Piatco did not actually use to build the NAIA Terminal 3.

Documents gathered by the Senate Blue Ribbon Committees show that the Department of Transportation and Communications agreed on July 12, 1997, to compensate Piatco for P180 million worth of expenses that Piatco supposedly incurred even though construction of the NAIA Terminal 3 had yet to begin.

The government has also been placed in a situation where it will have to compensate Piatco even in the event that Piatco breaches its own contracts, Lim said.

He stressed that under the BOT law, the government is required to compensate Piatco only if it terminates the contract "without Piatco’s fault or by mutual agreement."