Govt must pay Piatco over $371-M, CA rules

MANILA, Philippines (UPDATED) – The Court of Appeals has ordered the government to pay Philippine International Air Terminals Co. Inc. (Piatco) over $371 million as just compensation for the takeover of the Ninoy Aquino International Airport Terminal 3 (NAIA-3).

In a 30-page ruling dated August 7, the CA Third Division modified a Pasay Regional Trial Court (RTC) decision in May 2011 ordering the government to pay Piatco a net of $116.35 million, without interest.

The appellate court ordered the government to pay Piatco $371.43 million, which includes 6% interest per annum.

“The decision appealed from is modified. Just compensation is fixed at US$300,206,639.00 less US$59,438,604.00 paid in September 2006 or the net sum of US$240,768,035.00 with legal interest at 6% computed as above,” said the CA ruling.

“The Republic is thus ordered to pay Piatco just compensation as herein determined and which sum has reached the total of US$371,426,688.24 as of 31 July 2013,” it added.

The decision was penned by Associate Justice Apolinario Bruselas Jr. Associate Justices Rebecca de Guia-Salvador and Samuel Gaerlan concurred.

Piatco and its German partner Fraport bagged the contract to build NAIA-3 in 1997.

The Philippines nullified the contract in 2002 over allegations the consortium violated the Anti-Dummy Law. Legal and structural issues left the airport terminal mothballed for 6 years.

Interest

To arrive at just compensation, the CA said, “we simply put in the figure determined as replacement cost, which is $300,206,693.00, and factor in law and equity. Law and equity, however, dictate that interest should be imposed on the amount due Piatco.”

The replacement cost refers to the amount required in the replacement of a previous improvement or structure that is based on market prices at the time of taking.

The CA said, “simple economic, logic dictates that the replacement cost can never be lower than the construction cost at the time the structures were built.”

The CA said it was only reasonable that the government pay interest, too.

“It is unfair not to award interest, as what the RTC did, because evidently the Republic had been enjoying the income or fruits from the operation of the structures it had expropriated,” the court noted.

Promises

NAIA-3 was designed to be the country’s prime international airport terminal, helping ease congestion at the main terminal 1.

NAIA-3 opened in 2008 at half capacity. Transportation Secretary Joseph Emilio Abaya said the terminal was targeted to be 100% operational by December 2013. – Rappler.com