Court of Appeals dismisses appeal by German transport giant, Fraport AG

MANILA, Philippines—The Court of Appeals (CA) dismissed the appeal filed by German-based transport firm, Fraport AG, the foreign partner of the Philippine International Airport Terminal Co. (Piatco), which won in 1997 the Build-Operate-Transfer (BOT) contract of the Ninoy Aquino International Airport III project.

The CA decision paves the way for a trial involving an almost decade-old,  P100-million damage suit filed against Piatco by former Presidential Adviser on Strategic Projects Gloria Tan-Climaco in connection with allegations of bribery surrounding the construction of the NAIA Terminal III.

In a 24-page decision, the appeals court Special 5^th division, through Associate Justice Amy Lazaro-Javier, said Fraport AG is not immune from suit in the Philippines, and that the confidentiality rule on international arbitration shall not apply in the case.

Fraport AG, the foreign partner of the Philippine International Airport Terminal Co. (Piatco), won in 1997 the build-operate-contract of the NAIA Terminal III. A month before the terminal’s scheduled completion in 2003, the contract was nullified by then President Gloria Macapagal-Arroyo which was upheld by the Supreme Court.

Tan-Climaco, a  feisty, former SGV & Co. chairman, filed a case against Piatco in 2003,claiming, among others,  that Piatco’s  build-operate-transfer (BOT) contract for the new airport terminal was riddled with “onerous” provisions. She said government should take over the facility if negotiations to remove the inequitable provisions fail.

Climaco’s attacks on the PIATCo contract as early as 2002, coming less than three months before the new terminal was to open, shocked business leaders and surprised senior government officials at the time. The controversy rapidly developed into a crisis of sorts for the Arroyo administration which was vigorously pushing for similar BOT investment projects.

Fraport  is now seeking a reversal of the decision issued by Makati RTC Branch 147 Judge Maria Cristina Cornejo that denied their omnibus motion to dismiss the complaint filed by Climaco.

Tan-Climaco is claiming P10-million as actual damages, P75 million moral damages; P10-million exemplary damages and P5-million as attorneys’ fees against Fraport.

Fraport, in its arbitration request alleged that they engaged the services of the Villaraza, Angangco Law Office upon the recommendation of Tan-Climaco. The accused the law office of extorting millions of dollars, of which some portion will be given to ranking government officials, including Tan-Climaco.

Fraport’s allegations prompted Tan-Climaco to file a case against them in court.

After the Makati Court ruled in favor of Tan-Climaco, Fraport went to the Court of Appeals saying that “a full blown trial is unnecessary for this purpose because the statements in question are truly absolutely privileged.”

But the appeals court affirmed the lower court’s decision saying that “the trial court’s statement that petitioner’s defense of absolute privilege is argumentative, may be terse but direct to the point and complete in itself.”