Court orders Philippines to pay airport builder $510M

The Philippines' Supreme Court ordered the government on Wednesday to pay $510.3 million in compensation to a consortium that built Manila's biggest air terminal.

Manila airport Terminal 3 had been the subject of a legal dispute since the government seized it in 2004, citing breach of contract and failure to conform with safety standards.

The builders consortium -- which also includes Germany's Fraport AG and Philippine International Air Terminals Co., also known as Piatco -- had sought compensation and the row has been seen as a test of how the country handles foreign investments.

The total compensation represents the airport's $327 million replacement cost when the government took over in 2004 plus $243 million in interest until December 2014, according to the court's ruling.

The court also deducted $59.4 million that it said the government had initially paid Piatco.
"The government is hereby ordered to make direct payment on just compensation due to Piatco," court spokesman Theodore Te told reporters, reading from the court ruling.

The $600-million terminal, designed to decongest air traffic in the capital city of 12 million people, was mothballed for years until it was partially opened in 2008.

With 140 check-in counters and 188 immigration counters, the airport was designed to handle some 13 million passengers a year.

But the legal wrangling and structural defects have caused it to operate below capacity.

As a result, part of international air traffic to Manila continues to pass through decades-old Terminal 1, once voted by a travel website as one of the world's worst.

Air congestion, the cause of frequent flight delays, has prompted the government to scout for an alternative site for an international airport in nearby provinces.