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High Court tells gov’t to pay PIATCO

High Court tells gov’t to pay PIATCO

By Vince Alvic A. F. Nonato, Reporter | Posted on September 09, 2015 11:19:00 PM

THE SUPREME COURT has ordered the government to pay the primary contractor of the Ninoy Aquino International Airport International Passenger Terminal 3 (NAIA-IPT III) some $510.3 million in “just compensation,” settling an issue that has dragged for about a decade since the facility was expropriated.

This file photo taken on July 22, 2008 shows a view of terminal 3 at Ninoy Aquino International Airport in Manila. AFP In a 144-page decision dated Sept. 8, the court en banc voted 10-0 to adjust the principal amount to be paid the Philippine International Airport Terminals Company, Inc. (PIATCO) to reflect the facility’s replacement cost, which it said was more apt in this case than fair market value.

The ruling defined “replacement cost” as the amount needed to cover acquisition and installation of structures and other improvements based on the current market prices for materials, equipment, labor, contractor’s profit and overhead. This is different from fair market value, which is the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy, the ruling read.

“The use of depreciated replacement cost method is consistent with the principle that the property owner shall be compensated for his actual loss,” the court said. “The government should not compensate PIATCO based on the value of a modern equivalent asset that has the full functional utility of a brand new asset.”

The decision set the principal amount of just compensation at $326.932 million.

Subtracting from this amount the $59.439 million the government had paid on Sept. 11, 2006 in compliance with a 2005 lower court ruling for the takeover of NAIA-IPT III yields a $267.494-million balance.

The balance earns interest of 12% per annum for the period Sept. 11, 2006 to June 30, 2013, and 6% annually from July 1, 2013 until full payment, in compliance with Bangko Sentral ng Pilipinas Circular No 799 that set the lower rate.

All in all, total amount still to be paid was computed at $510.305 million as of Dec. 31, 2014.

The high court also upheld the validity of the expropriation case that started on Dec. 21, 2004 when it was filed before Branch 117 of the Pasay City Regional Trial Court, saying parties were afforded due process by the lower tribunal that eventually decided on a net compensation of $116.3 million. That amount was smaller than the compensation claimed by PIATCO: $470.45 million plus 12% interest per annum, and the government’s own estimate of $263.392 million at the time of expropriation — or as of December 2004 — after deducting depreciation and deterioration costs.

“The government is hereby ordered to make direct payment of just compensation due to PIATCO,” the ruling read, adding that the property title of the NAIA-IPT III can be transferred to the government only “after it fully pays PIATCO the just compensation due.”

Still, it affirmed that the government may “effectively deprive PIATCO of the ordinary use” of the facility, saying “[t]he transfer of property title from the property owner to the government is not a condition precedent to the taking of property.”

The court also ordered the government to pay P3.5 million to defray expenses of the board of commissioners formed in 2005 to determine the amount of just compensation.

The decision — rendered on four consolidated cases — was penned by Associate Justice Arturo D. Brion and concurred by associate justices Presbitero J. Velacourto, Jr.; Teresita J. Leonardo-de Castro; Diosdado M. Peralta; Lucas P. Bersamin; Martin S. Villarama, Jr.; Jose Portugal Perez; Jose Catral Mendoza; Estela M. Perlas-Bernabe and Marvic M.V.F. Leonen.

Chief Justice Maria Lourdes P.A. Sereno as well as associate justices Antonio T. Carpio, Mariano C. del Castillo and Francis H. Jardeleza did not take part, while Associate Justice Bienvenido L. Reyes was on leave.

NOT FINAL

Court Public Information Office Chief Theodore O. Te told reporters in a Wednesday briefing that the judgment can still be appealed through a motion for reconsideration.The NAIA contract, awarded to PIATCO on July 12, 1997 during the Ramos administration, was declared irregular by the succeeding Arroyo government in 2002.

The $600-million terminal, designed to decongest air traffic in the capital region of 12 million people, was mothballed for years until it was partially opened in 2008. Initially targeted to be in service in 2002, it started full operations only last year.

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 Web site 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. — with inputs from AFP and Reuters

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