Collapse of Fraport-Manila Hotel deal won’t affect government cases — OSG

The government’s position on the controversial Ninoy Aquino International Airport Terminal 3 (NAIA-3) should not be affected after Fraport AG of Germany, which holds a stake in the Philippine International Air Terminals Co. (Piatco) that built the terminal, announced its talks with the Manila Hotel Corp. (MHC) for the sale of its stake in the facility had collapsed, Solicitor General Alfredo Benipayo said yesterday.

Benipayo said the government was never involved in the reported deal between Fraport and MHC.

The German firm was reportedly selling its stake in Piatco for $200 million last year.

"That’s a private matter between Fraport and Manila Hotel. The government has nothing to do with it," Benipayo told The STAR in a telephone interview.

Asked whether the latest development would affect the government’s case before international arbitrators and local courts, he said: "That will not affect it at all either way."

The Manila International Airport Authority (MIAA) also expressed lack of concern over the aborted deal between Fraport and MHC.

"It doesn’t change anything. It does not change the fact that the Supreme Court has nullified their contract with the government," MIAA general manager Alfonso Cusi told The STAR.

As far as they are concerned, Cusi said, they are exerting all efforts to make their bid to open NAIA-3 this year.

Benipayo also corrected misconceptions that had the sale of Fraport’s stake to the MHC succeeded, a final settlement on the dispute over NAIA-3 would immediately be reached between the government and the consortium.

"There could be no settlement with just one shareholder, if there is any final settlement it should be with all the shareholders of Piatco. You cannot settle if you settle with Fraport alone or with Piatco alone," he pointed out.

A lawyer representing Piatco, however, said yesterday that the Supreme Court’s affirmation of a Pasay City court ordering the government to pay just compensation already signals the resolution of the case.

Lawyer Eduardo de los Angeles welcomed the high court’s decision and referred to it as "fair and reasonable."

"With this development, there is no reason now why payment is not to be made by the government. We are hoping that the government will comply with the SC decision," De los Angeles said.

On Wednesday, Fraport announced that it was pulling the plug on talks to sell its 30-percent stake in Piatco to MHC, complaining of "substantial roadblocks."

Fraport said however it is confident it has a strong case for compensation before the International Center for Settlement of Investment Disputes (ICSID) at the World Bank.

Benipayo, along with Foreign Affairs Secretary Alberto Romulo and Defense Secretary Avelino Cruz, met with Fraport’s legal team before ICSID last month in Washington, DC where the German firm lodged a complaint against the Philippine government.

NAIA-3 was originally due to open late in 2002, but the Supreme Court invalidated the contract in May of that year, citing that the terms were unfavorable to the government.

Fraport filed a case against the Philippine government before the ICSID while Piatco lodged a complaint before the Singapore-based International Court of Arbitration. Fraport is demanding $465 million in just compensation while Piatco itself is asking for $565 million.

Press Secretary Ignacio Bunye Jr. said the government would not shrink from its responsibility to compensate the facility’s builders.

"There are two processes here. In the local courts, we also have the arbitration proceedings that are going on. But at the end of the day, I believe just compensation will be paid. How this will be done, the details will have to be worked out," Bunye said in a press briefing yesterday.

Benipayo said it would take some time before the three-man ICSID tribunal could make judgments on the issue of jurisdiction and damages as documents submitted by both sides had reached nearly half a million pages already.

"Imagine, they have to read all of them," he said. — Paolo Romero, Rhodina Villanueva, Rainier Allan Ronda, Reuters, AFP