SC orders gov't to pay $510M to NAIA-3 builder | Inquirer News

SC orders gov’t to pay $510M to NAIA-3 builder

/ 05:24 PM September 09, 2015

THE Supreme Court has ordered the government to pay airport builder Philippine International Air Terminals Co., Inc. (Piatco) US$510.3-million as just compensation for the construction of Ninoy Aquino International Airport Terminal 3 (NAIA 3).

Voting 10-0, the high court, in a decision written by Associate Justice Arturo Brion, said the government shall pay US$510,304,535.80 plus six percent legal interest until fully paid.


But the high court clarified that while the government can continue operating the NAIA Terminal 3, it cannot assume ownership until it has fully paid PIATCO.

“The government is provisionally authorized to take the property for public purpose or public use whenever the court issues a writ of possession in favor of the government… may take the property for public purpose or public use upon the issuance and effectivity of the writ of possession…[However] the title to the property does not pass to the condemnor until just compensation is paid,” the high court said.


The high court came up with the said amount when it pegged the cost of valuation at $300,206,693.00 then added amounts for excess concession space, four-level retail complex, exclusions due to structural issues then deducted the depreciation and deterioration cost worth $36,814,613.00.

As of December 2002, the replacement cost was $297,996,738.00 multiplied by 1.097 percent inflation rate. The total replacement cost as of Dec. 21, 2004 was $326,932,221.26 plus 12% interest per year earned from Sept. 11, 2006 to June 30,2013 and six percent yearly interest from July 1, 2013 to Dec. 31, 2014 worth $242,810,918.54. Then, the high court deducted P59,438,604.00 proffered value which the government paid in 2006.

PIATCO got the contract to build the NAIA Terminal III on Sept. 20, 1996. In July 1997, the government executed a Concession Agreement with PIATCO for the NAIA III construction under the build-operate-transfer scheme. The agreement, however, was amended a year later. Under the amended agreement, PIATCO has been authorized to build-operate and maintain the NAIA III during the concession period of 25 years.

In 2000, PIATCO hired the services of Takenaka as well as the Asahikosan for the airport construction.

Two years later, PIATCO defaulted on its obligation to pay Takenaka and Asahikosan.

That same year, then President Gloria Macapagal-Arroyo declared that the government would not honor the PIATCO contracts at the same time Takenaka and Asahikosan suspended the airport construction.

Then a case was filed before the lower court which nullified the PIATCO contract because it was not a duly pre-qualified bidder.


In 2004, the government filed an expropriation case before the Pasay Court. The government deposited the amount of P3.002-billion representing the assessed value of the terminal.

The court issued a writ of possession in favor of the government. In 2005, the court appointed three commissioners to determine the amount for just compensation for PIATCO.

The government assessed the NAIA Terminal 3’s construction cost value (CCV) at $300,206,693 as of December 2002. Then, it went down to $263,392.081 due to depreciation.

The commissioners, on the other hand, pegged the just compensation at $376,149,742.56 in 2011 plus 12 percent interest rate per annum and payment of commissioners’ fees.

But the Pasay court rejected the computation to which PIATCO contested.

Then, in 2013, the Court of Appeals ordered the government to pay PIATCO $240,768,035-million as just compensation plus six percent interest until fully paid.

Also, the appeals court added that they cannot agree with the RTC ruling that deterioration of the property and costs for non-compliance with contract specifications should be a factor in computing just compensation.

The CA said contrary to lower court’s findings, they could not see any proof of the terminal’s structural defects.

“There is no clear evidence of any massive structural defect. What may have been considered as a manifestation of a structural defect was the much publicized collapse of a portion of the ceiling which coincidentally occurred just before the equally publicized ocular inspection of the NAIA Terminal 3 premises…The ceiling collapse, however, pertains more to a ‘finishing’ issue than a structural one,” the decision read.

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TAGS: Just Compensation, Ninoy Aquino International Airport Terminal III (NAIA 3), Supreme Court
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