Government seeks lower compensation for Piatco

MANILA, Philippines - Solicitor General Florin Hilbay has asked the Supreme Court (SC) to reconsider its decision ordering the government to pay the Philippine International Air Terminals Co. Inc. (Piatco) at least $510 million for the Ninoy Aquino International Airport Terminal 3 (NAIA-3) and instead lower the amount to about $104 million.

The interest amounting to $242,810,918.54 and the amount of $113,944,044 representing non-compliance with contract specifications of Piatco should be deducted from the principal amount, he said.

Hilbay asked the SC to instead fix the just compensation for Piatco at $163,959,441 less the proffered value of $59,438,604 already paid to Piatco, or a total of $104,520,837.

Imposing a 12-percent interest would be tantamount to allowing Piatco to profit from its own misdeeds, he said.

“If Piatco had not violated the laws, the government would have had a guaranteed return of P17.75 billion and the public would not have been severely inconvenienced for more than 10 years with an unfinished airport,” he said.

“This is not an expropriation of land, but of a depreciating improvement on land. Thus, in fixing just compensation, the Honorable Court must take into account the fact that the government is taking property that is losing value over time.” 

While the government is willing to pay just compensation, the SC must make sure that Piatco holds a clean title, Hilbay said.

This is so other claimants interested in a portion of just compensation will not be overlooked, he added.

Among these claimants were Fraport, an equity investor of Piatco for the NAIA-3 project; and Takenaka and Asahikosan, the subcontractors which actually built the NAIA-3 facility.

Fraport has sued the government several times before the international arbitral tribunal.

The dispute between Piatco and Takenaka and Asahikosan is still pending before the SC.

The SC must declare that any claim of Fraport, Takenaka and Asahikosan is enforceable only against the money to be paid by the government to Piatco, Hilbay said.

“To ensure fairness to the Republic, the Honorable Court should declare that the government is released from any contingent claims against the (NAIA-3) once just compensation is paid,” he said.

“This also ensures that public funds will not be spent beyond what the Honorable Court has fixed as compensation due.”

Upon payment of just compensation, the SC must award full ownership of the airport facility to the government free from any obligations to any of the claimants, Hilbay said.

“In other words, just compensation should be equivalent to a clean title,” he said.

Last Sept. 8, the SC set the amount of just compensation at $267,493,617.26 as of December 2004 plus annual interest of 12 percent from September 2006 and another annual interest of six percent from July 2013 until full payment.

The SC placed the total amount due to Piatco at $510 million as of December 2014.