MANILA. One of the parties seeking to operate Terminal 3 of the Ninoy Aquino International Airport (NAIA-3) has asked the Supreme Court to compel the government to award the contract to them because they have the "exclusive, clear, and vested statutory right to operate the facility."

In Tuesday's oral arguments, Perfecto Yasay, lawyer for Asia's Emerging Dragon Corp. (AEDC), told the high court that the AEDC was the first company to propose the construction of NAIA-3.

The high tribunal held oral arguments following petitions by AEDC and Congressman Salacnib Baterina to stop the government from paying the Philippine International Air Terminals Co. (PIATCo), which demanded full compensation for its work on NAIA-3.

The payment stemmed from a ruling by the Pasay City regional trial court, which had ruled in favor of PIATCo.

Baterina argued in his petition that PIATCo should only be paid the amount for its work on the actual construction of the facility, which does not include the land since the government owned it.

The high tribunal instructed the parties to focus on: whether a mandamus to the government was proper and if so, what would be its effects on the pending expropriation case before the Pasay regional trial court; whether the government has legal basis to award the terminal projects to third parties or to enter into concession contract with third parties; and whether the nullification of the PIATCo contract removed the NAIA-3 project from the coverage of the BOT law.

Yasay said following the Supreme Court's decision to void the contract forged by the government with PIATCo over alleged irregularities, the AEDC has the right to operate NAIA-3 "pursuant to the Build-Operate-Transfer [BOT] law."

The AEDC also assured the high court that once the contract would be given to them the company would not only finish the construction of NAIA-3 but would also assume the government's liability to PIATCo.

But Solicitor General Antonio Eduardo Nachura said the AEDC is no longer entitled to NAIA-3 contract.

"The Built-Operate-Transfer Law is no longer applicable because the project is already finished and the contract is void," Nachura said.

He also noted that expropriation is necessary for the immediate opening of the NAIA-3 terminal.

However, Baterina insisted that the expropriation case filed by the government against PIATCo be junked.

Baterina, through his counsel Jose Bernas, said the government is not obliged to pay any compensation or damages to PIATCo since its contract is null and void. Quoting Chief Justice Artemio Panganiban, Bernas said "a void contract is equivalent to nothing, and no award for liquidated damages may arise out of a void contract."

"In other jurisdictions, if the contract was procured by fraud, no recovery is permitted because no rights may arise out of an illegality," Bernas said.

He said if the expropriation pushes through, the government would also be obliged to pay PIATCo investor Fraport $500 million as just compensation in the arbitration it filed before the International Center for Settlement of Investment Disputes (ICSID).

"Since the ICSID arbitration is governed by Philippine law, the outcome of the ICSID arbitration will take its bearing from a Philippine court decision as to whether an expropriation has taken place," Bernas said.

But if the high court rules that expropriation is not in order, Bernas said, this "will influence the ICSID not to accord compensation that corresponds to an expropriation."

Besides, Bernas said, since the contract was tainted by fraud, bribery or conflict of interests, at best, PIATCo should recover only the reimbursement for cost of the construction of the terminal.

"While admittedly this remedy is harsh, it is in place, in order to have a deterrent effect on illegal government contracts," Bernas said.

The high court gave both parties 15 days to submit their respective memorandums.