GOVT REFUSES ARBITRATION ON PIATCO NAIA3 CONTRACT

Manila, Jan. 19, 2003 (Tribune) - No arbitration is forthcoming, government lawyers told the Supreme Court (SC) this week in connection with the Ninoy Aquino International Airport Terminal (NAIA) III.

Confirming earlier fears of the Philippine International Airport Terminals Co. Inc. (Piatco) of a hard line approach by the government, state lawyers from the Office of the Solicitor General (OSG) and the Office of the Government Corporate Counsel (OGCC) told the SC, in a 113-page memorandum, that it will not heed its recommendation to enter into arbitration or mediation talks over a controversial $500-million passenger terminal, as ordered by Chief Justice Hilario Davide Jr.

In its 113-page brief, the OSG and the OGCC said Piatco's insistence on arbitration is "erroneous" and "seriously flawed" because it is premised on the validity of the contracts for the construction and operation of the NAIA Terminal 3.

Piatco, through its lawyer, former Solicitor General Frank Chavez, earlier informed the high court that the government snubbed its two letters seeking to negotiate and appoint an expert neutral evaluator to resolve their dispute, as provided for in the agreement between the state and the private firm.

"To stake a claim such as this would be tantamount to ignoring the fact that the constitutional and statutory soundness or the contracts have been questioned; to submit to arbitration at this juncture would be an admission that the contracts are valid," government lawyers explained.

Solicitor General Alfredo Benipayo and acting Government Corporate Counsel Manuel Teehankee claimed the concession agreement, the Amended and Restated Concession Agreement (Arca) and its three supplements are "null and void."

Benipayo and Teehankee urged the SC to grant three petitions against Piatco and nullify the five contracts for alleged violations of the Constitution and the Build-Operate-and-Transfer Law.

"This is a point that the government cannot concede. There can be no arbitration based on the Arca because the Piatco contracts are void ab initio, and therefore its provisions are deemed to have never existed at all," the memorandum stated.

The government lawyers claimed payments Piatco made to the government, as well as the supposed completion of Terminal 3, will not validate the void contracts.

Piatco claimed in a previous pleading that it paid and the government received P180 million as relocation expenses for the Air Force, P300 million for the first year of pre-operation and P300 million for the second year of pre-operation, or a total of P780 million.

"Void contracts cannot be subsequently ratified by either full or partial performance of their pre-stations. And since the contracts and their arbitration provisions are void, then the government cannot be compelled to submit the dispute to arbitration," they said.

The government lawyers also pointed out that Terminal 3 should be operational by July at the earliest date but claimed it is not equipped to provide the simplest of amenities of an international passenger terminal, citing the alleged lack of restaurants, duty-free shops, bookstores and all other commercial establishments.


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