CA to gov’t: Pay Piatco in full before claiming NAIA 3
CA to gov’t: Pay Piatco in full before claiming NAIA 3


The CA says the Pasay RTC was wrong in allowing the government's takeover of NAIA 3 upon the mere deposit of just compensation in an escrow account

MANILA, Philippines – The Court of Appeals (CA) upheld its decision that Philippine International Air Terminals Co. Inc. (Piatco) owns the Ninoy Aquino International Airport Terminal 3 (NAIA 3), unless the government releases the P16 billion just compensation deposited in an escrow account.

In denying a motion for reconsideration filed by government subcontractors Takenaka and Asahikosan Corporations, the appellate court barred the government from taking ownership of the controversial airport terminal.

Takenaka and Asahikosan had earlier sought the reversal of the CA decision last October 20, 2014, where the CA had ruled that the Pasay City Regional Trial Court (RTC) Branch 117, under Judge Eugenio de la Cruz, “gravely abused its discretion” when it allowed the government to exercise ownership over NAIA 3 and settle its compensation to Piatco through a deposit of P16 billion in an escrow account, with conditions set for its release.

In the two-page resolution penned by Associate Justice Franchito Diamante, the CA said there are “no new grounds or bases” raised by the two Japanese firms that would compel a reversal of its October 2014 decision.

Associate Justices Danto Bueser and Melchor Sadang concurred with the ruling.

In May 2011, the Pasay RTC ordered the government to pay Piatco just compensation for the takeover of the airport facilities.

However, the CA said that the lower court was wrong in allowing the takeover upon the mere deposit of the compensation to the escrow account, adding that the amount of compensation is still pending appeal before the Supreme Court.

“We agree with Piatco that deposit of just compensation in an escrow account does not constitute ‘payment’ that would extinguish an obligation as contemplated in the Civil code and other relevant laws,” the CA said.

The court also pointed out that the Supreme Court has recognized Piatco as the rightful owner of NAIA 3.

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

In 2002, the Philippines nullified the contract due to allegations that the consortium violated the Anti-Dummy Law. 

Conditions ‘violate the law’

In its decision, the CA also said that the conditions imposed by the Pasay RTC over Piatco violate the law and Supreme Court rulings on expropriation proceedings.

The lower court had imposed the following conditions:

  • Piatco must submit a warranty that the structures and facilities of NAIA 3 are free from all liens and encumbrances.
  • Piatco must submit an undertaking that it is assuming sole responsibility for any claims from third persons arising from or relating to the design or construction of any structure or facility of NAIA 3 structures, if any.
  • Piatco must submit a duly executed deed transferring the title of the NAIA 3 structures and facilities to the government, without prejudice to the amount which will finally be awarded to it by the appellate court.

The CA said these conditions make it legally impossible for Piatco to receive just compensation.

In the case of the third condition, the CA said ownership and registration of the facilities may only transfer to government when the decision in the expropriation becomes final and executory pursuant to Republic Act 8974.

The CA added, “Thus, requiring Piatco to execute a deed when the case is actually an expropriation proceeding where there is forced taking of property for public use, is altogether inconsistent with the nature thereof.”

The CA also said that the $85.7 million claim for compensation of Takenaka and Asahikosan Corporations pursuant to the orders of a London court is still premature.

It added that the issue is currently pending before the Philippines’ High Court. –


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