MANILA - The Philippine government yesterday took control of Manila airport's controversial new Terminal Three after agreeing to pay $58.8-million in compensation to its builders.

The government has agreed to pay Philippine International Air Terminal Corp., which includes Germany's Fraport AG, presidential spokesman Ignacio Bunye said in a statement.

"Our decision to pay the compensation is all about adherence to the rule of law and the interest of the people," Bunye said.

PIATCO built the $650-million terminal under a "build-operate-transfer" contract. President Gloria Arroyo revoked the contract in 2002 on the grounds that certain terms were illegally renegotiated by her deposed predecessor Joseph Estrada in 1998.

The terminal has been mothballed ever since and has been the subject of bitter legal arguments between the government and the builders.

"This legal dispute has incurred so much delay and we believe it is high time now to settle the issue once and for all in order to serve the interest of the public with regard to the use of the facility," Bunye said.

The money was a "reasonable price" to pay compared to what the government stood to gain once operations start, Bunye added.

The Supreme Court last December ordered the government to pay 3.0 billion pesos (58.8 million dollars) as compensation to the consortium but the government later won an injunction against the order.

An appeals court on Friday ordered the lifting of the injunction and the government is now preparing to pay Piatco, said Budget Secretary Rolando Andaya.

Fraport, which held a 30-percent stake in PIATCO, is separately pursuing a separate arbitration in Washington, demanding compensation of $465 million for the project.

Terminal Three is designed to handle 13 million passengers a year and ease congestion at the two existing international terminals in Manila.*AFP

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