Piatco wants higher compensation for NAIA 3 expropriation

MANILA, Philippines - The builder of the Ninoy Aquino International Airport Terminal 3 is not happy with the $510-million just compensation awarded by the Supreme Court (SC) to the firm for government’s expropriation of the airport.

In a motion filed last Sept. 28 that was obtained by reporters yesterday, the Philippine International Air Terminals Co. Inc. (Piatco) asked the SC to partially reconsider its decision issued last Sept. 8 that deducted about $106.9 million for depreciation and deterioration as well as attendant cost from the just compensation.

Piatco said the attendant cost worth $70,197,802, depreciation value of $35,076,295 and deterioration value of $1,738,318 should be included in the award.

The firm questioned the replacement cost method under Republic Act 8974, the law that governs right-of-way acquisition for government projects and the use of depreciated value of the facility in computing the amount.

“Just compensation is determined based on RA 8974, its IRR and equity.

“This Honorable Court’s use of the depreciated replacement cost method is therefore clearly misplaced. RA 8974 and its IRR never used the term depreciated replacement cost nor made any reference to depreciation, deterioration or any other type of adjustment to replacement cost,” it argued in its 33-page motion.

“With all due respect, the financial concept of depreciation is wholly inapplicable in the process of determining just compensation in expropriation. Depreciation is but an accounting concept that facilitates the standard and uniform representation of decreasing asset values in books of accounts. An asset may still be valuable and yet appear as fully depreciated in financial statements,” Piatco stressed.

As to its claim on attendant costs, Piatco contested the SC’s conclusion that the amount was already included in the construction cost valuation.

“The construction cost or the base value is exclusive of all other attendant costs such as the engineering and architectural services fees, quality assurance services fees, construction supervision services fees, construction insurance, site development costs, financing costs and other associated costs,” it pointed out.

Apart from these amounts, the NAIA-3 builder also sought the inclusion in just compensation the P1,784,704,634.23 in taxes being collected from it by the Bureau of Internal Revenue (BIR) following the SC decision.

Piatco told the SC that it has questioned before the Court of Tax Appeals (CTA) BIR’s assessment for supposed value-added tax deficiency for years 2000, 2001 and 2002, insisting that it is exempted from payment of VAT.

It explained that the BIR ruled in July 2012 that the company, as a Philippine Export Zone Authority (PEZA)-registered enterprise, is exempted from payment of all other national taxes, which include VAT on importations of capital equipment, building materials and supplies for the construction of the NAIA-3.

But last February, Piatco received Formal Assessment Notices from the BIR for the same VAT assessment.

“This came as a shock to Piatco considering that the BIR itself previously declared that the deficiency assessments had no basis and thus, null and void. Now, it is the very same BIR that is assessing Piatco for the same deficiency VAT that it had previously cancelled and nullified... There is no other way to describe this other than a naked act of oppression against Piatco,” it lamented.

The firm then asked the SC to include this amount to the just compensation grant.

Lastly, Piatco asked the court to count the 12 percent interest for the payment of the compensation from December 2004 (date of actual taking) to June 2013.

Last month, the government also appealed the SC ruling, but sought lower amount of just compensation for Piatco.

Solicitor General Florin Hilbay asked the high court to lower the amount of compensation to about $104 million.