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Naia 3 builder wants more than $510-M just compensation

/ 06:33 PM October 09, 2015

The Philippine International Air Terminals Company Inc. (Piatco), builder of the Ninoy Aquino International Airport Terminal 3 (Naia 3), wants more than the $510-million just compensation awarded to it by the Supreme Court for the government’s expropriation of the airport.

In its motion dated Sept. 28 and made public on Friday, Piatco urged the high court to partially reconsider its Sept. 9 ruling to include the attendant cost and value of depreciation and deterioration worth P$107 million in the amount of the government’s compensation.

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

The high court, in its ruling, said depreciated replacement cost method should be applied in the computation for just compensation instead of the new replacement cost method because the Naia 3 was not brand-new and did not have full economic and functional utility.

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But Piatco argued that under Republic Act No. 8974 or the law that governed right-of-way acquisition for national government projects and the use of depreciated value of the facility in computing the amount and its implementing rules and regulations, there was no mention of a “depreciated replacement cost.”

“It is cardinal rule in statutory construction that when the law does not distinguish, we must not distinguish. ‘Replacement cost’ should be taken to mean what the law says it means. If the legislature intended for depreciation, deterioration or other type of adjustment to be factored in estimating replacement cost, then it would have explicitly provided so,” Piatco’s motion stated.

“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.

Piatco also questioned the high court’s conclusion that the said amount had been 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.

Piatco added that they cannot be blamed for the depreciation of the airport’s value.

“Lest it be forgotten, the property being expropriated is a brand new Naia 3 that has never been used or operated,” Piatco said, adding that depreciation started only when the government operated the airport.

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Piatco also told the high court that it should also include in the just compensation the P1,784,704,634.23 in taxes being collected from them by the Bureau of Internal Revenue (BIR).

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

They pointed out that the taxes being collected by the BIR from them based on the July 2015 assessment were the same taxes that the BIR cancelled in 2012 on the grounds that the assessments were baseless and void.

Piatco also wanted a refund of the P2.55 million it had paid for the expropriation expenses since the high court ruled that the government alone should shoulder the amount.

Last month, the government, through Solicitor General Florin Hilbay, said Piatco was entitled to only $104.5-million just compensation instead of $510-million because the structure involved had been losing value over time.

“The idea is to return the value of what Piatco invested, not to return it with opportunity costs. The concept of mutual restitution is to make Piatco ‘whole,’ not ‘whole with benefits,'” Hilbay said, considering that Piatco had its own misdeeds.

Hilbay said the high court’s 12-percent interest requirement to the government and the six-percent thereafter equivalent to reasonable return on investment totaling $242,810,918.54 should be excluded from the computation of just compensation.

The government reminded the high court that it had declared that Piatco was not a qualified bidder for the airport construction. Its contract with the government, Hilbay said, was even nullified by the high court.

The concept of just compensation, Hilbay said, does not imply fairness to the property owner alone but also to the public which “ultimately bears the cost of expropriation.”

“In fine, the Republic should only pay Piatco the following, $300,206, 693.00 (in base construction cost valuation as of December 2004) less $1,738,318.00 (deterioration), $35,076,295.00 (depreciation) and $113,944, 044.00 (rectification for contract compliance, additional areas to be built), or the net sum of $149,448, 037.00. Applying the inflation rate of 1.0971, the total just compensation payable to Piatco is $163, 959, 441.39 less the proffered value of $59, 438, 604.00, or $104,520,847.39,” Hilbay said. Tetch Torres-Tupas/RC

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TAGS: expropriation, Just Compensation, Ninoy Aquino International Airport Terminal 3 (NAIA3), Piatco
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