SC orders government to pay Piatco $510-M compensation

MANILA, Philippines - The Supreme Court (SC) has ordered the government to compensate the Philippine International Air Terminals Co. Inc. (Piatco) for the expropriation of Ninoy Aquino International Airport Terminal 3.

In a unanimous decision promulgated last Tuesday, the high court has 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 high court pegged the total amount due Piatco at $510 million as of December 2014.

It applied the replacement cost method under Republic Act 8974, the law that governs right-of-way acquisition for national government projects.

“The government is hereby ordered to make direct payment of the just compensation due to Piatco,” read the ruling written by Associate Justice Arturo Brion.

The SC has based the amount on depreciated value of the terminal.

“The use of depreciated replacement cost method is consistent with the principle that the property owner shall be compensated for his actual loss. The government should not compensate Piatco based on the value of a modern equivalent asset that has the full functional utility of a brand new asset,” it explained.

The high tribunal held that the government may continue to operate NAIA 3, but ownership would have to remain with Piatco until full payment of the compensation is made.

In issuing the ruling, the SC partially reversed the 2013 decision of the Court of Appeals that set just compensation at $371,426,688.24 as of July 2013.

On March 31, 2011, a court-created Board of Commissioners (BOC) set the amount at $376,149,742.56 plus a 12-percent interest rate per annum.

In a May 23, 2011 ruling however, the Pasay Regional Trial Court Branch 117 rejected the computations submitted by the BOC, Piatco and intervenors. Instead, the court went with the computation of the government that just compensation should only be pegged at $149,448,037.

Piatco later contested the just compensation set by the trial court, and insisted that the terminal did not suffer massive structural defects, which the court used as basis for the deductions. Piatco also insisted on its claims “on the income, fruits and benefits generated from the operation of NAIA Terminal 3 despite the fact that the Republic has been illegally possessing and operating the terminal.”

The dispute was then elevated to the Court of Appeals, which in August 2013 disagreed with the lower court when it deducted depreciation, deterioration and non-compliance from the construction cost.

The CA held that a structure’s value depreciation should not be deducted from the replacement cost or just compensation, which should neither be equal to nor higher than the construction cost.

In its ruling, the CA also stressed it was “just and reasonable” for the government to pay interest to Piatco on top of the just compensation.

The CA, however, placed the interest rate at 6 percent per annum, half of what Piatco was asking for and what the BOC had recommended. Piatco and the government both elevated the case before the SC.