EDITORIAL - In limbo

Travelers participating in an online survey gave the Ninoy Aquino International Airport an improved rating recently, citing the transfer of several foreign carriers to the NAIA Terminal 3. While still small for the nation’s premier airport, the NAIA 3 is a big improvement from the original terminal, which is undergoing renovation.

Now the fate of the NAIA 3 is uncertain following an order from the Court of Appeals, effectively directing the government to first settle its compensation dispute with the terminal’s developer PIATCO before taking over the facility. The government says it will continue operating the NAIA 3 while it prepares to appeal the CA order.

PIATCO, or the Philippine International Air Terminals Company Inc., and its German partner Fraport AG had appealed a ruling of the Pasay City Regional Trial Court requiring the private developer to meet certain conditions before it can withdraw $175,787,245.10 or about P3 billion as compensation for the NAIA 3.

The Arroyo administration had canceled the contract with PIATCO and Fraport in 2002 amid allegations of corruption. In typical Philippine fashion, the case has dragged on, costing taxpayers millions in litigation fees in Manila, Singapore and Washington. The case has also served as a cautionary tale for foreign investors particularly from Europe who are considering doing business in the Philippines.

Germany has been pushing for years to speed up the settlement of the case, to boost interest in the Philippines among investors in Europe’s strongest economy. This year the Philippines and Germany are marking 60 years of formal diplomatic relations, with the two countries celebrating many shared values anchored on democracy and the free market of goods and ideas.

For over a decade the case involving one of Germany’s largest companies, which operates its main gateway in Frankfurt, has put a strain on otherwise strong bilateral ties. The case is one of the most notorious examples of the weakness of the Philippine justice system – one of the factors consistently cited as a disincentive for private investment. Now that weakness is sowing confusion again in an airport that has been consistently rated as one of the world’s worst. The government must work for a final settlement and get this issue out of the way ASAP.