SC orders gov’t to pay Piatco P24B with interest | Inquirer News

SC orders gov’t to pay Piatco P24B with interest

By: - Reporter / @TarraINQ
/ 04:30 AM September 10, 2015

The Supreme Court has ordered the government to pay the Philippine International Air Terminals Co. (Piatco) $510 million (P23.9 billion) in just compensation with an annual interest of $16.049 million (P753.49 million) until the amount for the construction of the Ninoy Aquino International Airport Terminal 3 (Naia 3) is fully paid.

The Supreme Court, however, allowed the government to continue operating the 63.5-hectare airport terminal in Pasay City, although Piatco remains the rightful owner, until full payment of the compensation.


In a 10-0 vote on Tuesday, the full Supreme Court ruled that Piatco was the “lawful recipient of just compensation” and directed the government to also pay interest on the terminal’s assessed value even after it made an initial payment in 2006.

“Piatco, as the owner of the Naia 3, shall solely receive the just compensation… . It is the owner of the expropriated property who is constitutionally entitled to just compensation,” the Supreme Court said in the ruling written by Associate Justice Arturo Brion.


The ruling junked the plea of contractors Takenaka and Asahikosan to get a share of the settlement as builders of the terminal.

“Contrary to Takenaka and Asahikosan’s position, in the Philippine jurisdiction, the person who is solely entitled to just compensation is the owner of the property at the time of the taking,” the court said.

“[T]he test of who shall receive just compensation is not who built the terminal, but rather who its true owner is,” it said.

Second stage

The 144-page decision released Wednesday represented the second stage of the Naia 3 expropriation, where the court determined the “replacement cost,” or the amount the government should pay Piatco factoring in the terminal’s depreciation and maintenance and improvement costs.

The first stage “became final” in September 2006 when the state, in compliance with an earlier Supreme Court ruling on a related case, paid Piatco $59.44 million (P2.79 billion) as initial payment for the terminal after securing a writ of possession to operate Naia 3.

“[The] government’s initial payment of just compensation does not excuse it from avoiding payment of interest on the difference between the adjudged amount of just compensation and the initial payment,” the court said.


“Contrary to the government’s opinion, the interest award is not anchored either on the law of contracts or damages; it is based on the owner’s constitutional right to just compensation,” the court said in the decision that ruled on four consolidated petitions concerning Naia 3.

Computation amended

The ruling amended the Court of Appeals’ earlier computation of the just compensation, which was pegged at $240.768 million, with legal interest of 6 percent.

The latest decision fixed the principal amount at $267.493 million (P12.55 billion), with payment of $32.099 million (P1.506 billion) between September 2006 and June 2013 at 12-percent annual interest under the law, and $16.049 million (P753.49 million) annually from July 2013 at the amended interest rate of 6 percent. (See What Went Before, on this page.)

“Without prompt payment, the property owner suffers the immediate deprivation of both his land and its fruits or income. The owner’s loss, of course, is not only his property but also its income-generating potential,” the court said.

Avoiding confusion

While in the process of settling this amount, the government may continue to operate the terminal, as the court differentiated from “the taking of the property” for the purpose of public use, and “the transfer of the property title from the private owner to the government.”

“To clarify and to avoid confusion in the implementation of our judgment, the full payment of just compensation is not a prerequisite for the government’s effective taking of the property,” the court said.

It said Republic Act No. 8974, the law on the acquisition of a site or location for a government infrastructure project, “allows the government to enter the property and implement national infrastructure projects upon the issuance of the writ of possession.”

As in the court order, this would necessitate the payment of interest to the property owner: “When the taking of the property precedes the payment of just compensation, the government shall indemnify the property owner by way of interest.”

“The transfer of property title from the property owner to the government is not a condition precedent to the taking of property. The state may take private property prior to the eventual transfer of title of the expropriated property to the state,” the court explained.

While awarding just compensation to Piatco, the Supreme Court threw out the private contractors’ plea to get a share of the government’s earnings from operating Naia 3.

Equivalent of income

The court said the interest it awarded to Piatco as part of the grant for just compensation was “in reality, the equivalent of the fruits or income of the seized property.”

“Piatco’s claim is unmeritorious. The state, by way of interest, makes up for the shortfall in the owners’ earning potential and the absence of replacement property from which income can be derived,” the court said.

Naia 3 partially opened in 2008, after being mothballed for six years due to legal disputes.

It became fully operational a year ago, with domestic and international airlines using the terminal.—Tarra Quismundo

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TAGS: Naia Terminal 3, Philippine International Air Terminals, Piatco, Supreme Court
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