MANILA, Philippines — The Court of Appeals has ruled that the attorney’s fees received by government’s legal team for the arbitration case against Philippine International Air Terminals Company are illegal.
The Special 11th Division of the CA, in a decision dated June 4, upheld the Mandaluyong Regional Trial Court Branch 31’s ruling that junked the government’s petition for recognition and reinforcement of the final award of the $6 million for the cost of arbitration proceedings.
It was earlier ruled by the International Court of Arbitration that Piatco will shoulder the costs of the case, amounting to $24 million. Twenty-five percent of the said fee—$6 million— will be given to the claimant, which is the Philippine government team.
On Dec. 6, 2012, the government filed a Petition for Recognition and Enforcement of a Foreign Arbitral Award seeking the payment from Piatco before the local court.
One of the lawyers who represented the Philippine government in the case is former Chief Justice Maria Lourdes Sereno, whose services were hired by the government from 2003 to 2009 while she was still a professor at the University of the Philippines.
On Aug. 29, 2014, the local court ruled in favor of Piatco. The court said that the “Philippines’ procurement law was violated in connection with the Government’s engagement of foreign counsels and legal consultants.”
“The trial court thus concluded that the Final Award is not enforceable under Philippine Law for being contrary to public policy,” the decision reads.
Aggrieved, the Philippine government elevated the case to the Court of Appeals.
The government won at the 17th Division of the CA, but Piatco sought to overturn the ruling in a motion for reconsideration.
The Special 11th Division granted Piatco's appeal.
“Any enforcement and recognition of the Final Award, whose object is defined as 25% of those illegal government expenses is against Philippine public policy, indeed against Philippine law, and should be refused,” the CA held.
“Besides, attorney’s fees are not granted every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate,” the decision penned by Associate Justice Ramon Bato Jr. reads.
Echoing the stance of the local court, the CA said that the government “violated the fundamental public policy on the use of public funds.”
Sereno and Piatco
Sereno was part of the government’s legal team that defended the government in the arbitration case against Piatco.
Others in the Philippine team are White and Case, Allen & Gledhill, Sycip Salazar Hernandez & Gatmaitan and Follosco Morallos & Herce law firms. Also in the team are former Justices Florentino Feliciano and Vicente Mendoza.
The former chief justice’s camp, in a statement, stressed that Sereno is “not a party to the case,” that is between the Philippine government and Piatco.
“She was hired by government as lawyer and she accepted the engagement in good faith. She was one of the lawyers that helped the government win the case against PIATCO,” lawyer Jojo Lacanilao, spokesperson of Sereno, said in a message to reporters.
“Sereno should not be dragged into the issue on the decision of CA on this case,” Lacanilao stressed.
The fee received by Sereno in the case was cited in the impeachment case against her, filed by lawyer Lorenzo Gadon. Gadon accused her of misdeclaring the funds in her Statement of Assets, Liabilities and Net Worth—a claim vehemently denied by the former chief justice.
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