Press Release
August 20, 2007

PIMENTEL BEWAILS ENORMOUS DAMAGES
CAUSED BY CONTINUED MOTHBALLING OF NAIA-3

Senate Minority Leader Aquilino "Nene" Q. Pimentel, Jr. (PDP-Laban) today said the so-called victory of the Philippine government in an international arbitration case on the idle Ninoy Aquino International Airport-Terminal 3 is nothing to crow about considering the enormous damage inflicted on the country by the prolonged and intolerable delay of the opening of the aviation facility.

Pimentel said the almost five-year delay in the opening of NAIA-3 has severely set back the country's drive to lure more foreign tourists and investors and deprived Filipino travelers of the opportunity to enjoy the convenience of a state-of-the-art, modern air terminal.

He lamented that the protracted legal dispute over the NAIA-3, as a consequence of the government's decision to unilaterally void its build-operate-and-transfer contract with the Philippine International Air Terminals Company (Piatco), has gravely impaired the confidence of the international business community in the country's business environment.

Pimentel said the complaint of Piatco's investment partner, Germany's Fraport, over its inability to recoup its supposed $425 million capital in the NAIA-3 project has irreparably strained the country's diplomatic relations with Germany and scared away German investors.

In fact, he said German investments in the Philippines plunged from $330 million in 2003 to nearly zero in 2004 while the German government opted to channel its overseas development assistance to the non-government organizations instead of the Arroyo government to manifest their disenchantment over the unresolved NAIA-3 controversy.

Given these adverse circumstances, Pimentel said there is hardly anything to rejoice over the decision of the Washington-based International Center for the Settlement of Industrial Disputes (ICSID) to dismiss Fraport's claim for compensation for lack of jurisdiction.

"In terms of business opportunities and revenues that were lost, as well as the embarrassment that the country has suffered due to the continued mothballing of the NAIA-3, the harm that has been caused by this fiasco is simply incalculable. And because of this, the verdict of the World-Bank ICSID, while favorable to our government, appears to be a pyrrhic victory," he said.

Pimentel said the ruling of the WB-ICSID does not mean that the legal dispute over the NAIA-3 is over. In the first place, he pointed out that the arbitration panel threw out Fraport's compensation claim on the ground that it lacked jurisdiction to hear the case. This means that the panel did not rule on the merit of the case.

Furthermore, he said a related arbitration case is still being heard before the Singapore-based International Chamber of Commerce while the claim for just compensation by Piatco is being heard before a Pasay City Regional Trial Court.

Pimentel said that while WB-ICSID may have upheld the government's claim about the irregular nature of Fraport's investment in NAIA-3 and the Supreme Court agreed with its contention that there were legal infirmities in the Piatco contract, the government is not without fault in the anomalies that tainted the project.

Noting that the NAIA-3 project was started by the Ramos administration and pursued by the Estrada and Arroyo administration, Pimentel said the Arroyo administration did nothing to stop the construction of the air terminal and made an issue out of alleged defects in the Piatco contract only after the project was more than 90 percent completed.

"The Arroyo government did not find anything wrong with the NAIA-3 contract while the project was going on. Then suddenly, it discovered that the deal was fraught with anomalies and disadvantageous to the government only when the airport terminal was about to open in November 2002," Pimentel said.

"Was it because at that stage, the government came under heavy pressures from powerful forces to nullify the deal with Piatco?"

Despite the unresolved legal problems, Pimentel said what is important is for the government to take the necessary steps to fast track the repair of the NAIA-3 and to pave the way for its opening as early as possible. He said the government should also be decisive in going after government personalities who were involved in the alleged fraud that attended the airport deal.

He also emphasized that the government should continue negotiating with the contractor and investors in order to settle the compensation issue, which once solved, will render moot and academic pending cases with the courts and the international arbitration tribunal.

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