CA doubles Piatco compensation to $371 M

MANILA, Philippines - The Court of Appeals (CA) has ordered the government to pay Philippine International Air Terminals Co. Inc. (Piatco) $300,206,639 plus legal interest of six percent for the expropriation of the Ninoy Aquino International Airport Terminal 3.

As of July 31, 2013, the “just compensation” with interest for Piatco, according to the CA, amounted to $371,426,688.24.

The CA modified a 2011 decision of the Pasay City Regional Trial Court Branch 117, which awarded Piatco compensation of $175,787,245.10 less the $59,438,604 that the government had already paid the NAIA 3 builder in September 2006, or a net sum of $116,348,641.10.

“The RTC therefore erred in adopting the proposal of the Republic to allow deductions from the construction cost of $300,206,693.00,” read the CA decision.

“We would be accepting the preposterous proposition that replacement cost under the replacement cost method would be lower and lower as one moves away from the original point of construction.”

The CA pegged the compensation at $300,206,639 minus the $59,438,604 or net sum of $240,768,035 – an amount more than double the net amount that the Pasay court had set.  

The six percent legal interest imposed had made the amount over 300 percent more than the court-set amount.

The CA said the much publicized collapse of a portion of the ceiling of NAIA Terminal 3 in 2008 could not be used to justify deductions due to supposed deterioration of the structure.

“The ceiling collapse, however, pertains more to a ‘finishing’ issue than a structural one,” read the CA decision.

“‘Finishing’ in construction lingo has to do with the aesthetics, convenience and functionality of a built structure.”

A structure’s value depreciation must not be deducted from the replacement cost or just compensation, which should either be equal or higher than the construction cost, the CA added.

The CA ruled that payment of interest to Piatco for the compensation is just and reasonable.

“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 (that is use and enjoyment) of the structures it had expropriated,” read the CA decision.

“This is not only compliant with law and jurisprudence but also with equity as evident from the 2004 Resolution that the compensation must be just and in accordance with law and equity, for the government cannot unjustly enrich itself at the expense of Piatco and its investors.”

The CA placed the interest rate at six percent, half of what Piatco was asking for and what the Board of Commissioners (BOC) had recommended.

The CA upheld the Pasay court’s 2010 order for Piatco, the government, and the Japanese subcontractors – Takenaka Corp. and Asahikosan Corp. – to each pay P1.75 million as commissioners’ fee.

The Japanese firms must be included in paying the fees since they have become intervenors in the case, the CA added.