CA orders Piatco to pay gov’t P300M arbitration cost
The Philippine International Air Terminals Company Inc. (Piatco), builder of the Ninoy Aquino International Airport Terminal 3 (NAIA 3), has been ordered by the Court of Appeals (CA) to immediately pay the government US$6 million or almost P300 million representing costs of the arbitration proceedings before the International Chamber of Commerce (ICC) International Court of Arbitration.
In a 23-page decision written by Associate Justice Marlene Gonzales Sison, the appeals court 17th division reversed and set aside the 2014 decision by the Mandaluyong Regional Trial Court Branch 213 which held that the final award is not enforceable under the Philippine law for being contrary to public policy.
The lower court pointed out that the final award is unenforceable because the government violated the procurement law when it hired foreign legal counsels and consultants without public bidding.
But the appeals court said no public policy was violated by the Philippine government as it noted that the award was duly awarded by the arbitral tribunal.
“Assuming arguendo that the government violated all the pertinent laws regarding public bidding, procurement and disbursement, will the recovery of the government of US$6,009,351.66 result in any injury to the public or is against the public good? We answer in the negative. Definitely, any amount that goes to the government coffers is not detrimental, but on the contrary, beneficial to the public,” the CA said in granting the petition for review filed by the Department of Transportation and Communications (DOTC) and the Manila International Airport Authority.
“There may be public policy against unlawful and unnecessary expenditure, but there is no public policy that prohibits the recovery of that expenditure by the government,” it added.
PIATCO’s opposition, according to the appeals court, was geared towards preventing the government from wasting public money.
However, the CA noted that by the time the government filed a petition with the trial court for the enforcement of the arbitral tribunal ruling, it has already incurred cost and expenses.
“The trial court, with its limited jurisdiction, cannot stop a previous action of the government. At least in this case, the past cannot be remade. What has been done cannot be undone. These are the verities the parties cannot debate,” the CA said.
The appellate court also gave weight to the fact that both the government and PIATCO agreed that the losing party in the arbitration proceedings should pay the cost incurred by the winning party.
“Having adjudged as the losing party, PIATCO cannot escape its liability towards the government by invoking a frivolous defense of ‘contrary to public policy,’” the CA pointed out.
It added that the Office of the Solicitor General (OSG) which represented the government in the arbitral tribunal was given a leeway in hiring co-counsels to defend the interest of the government abroad.
The CA also did not give merit to the claim of PIATCO that its obligation has been extinguished by virtue of legal compensation considering that the government still owed it P293.5 million representing its annual guaranteed payments which were never returned by the government.
The CA said PIATCO’s claim is just a claim since no court has ever ruled that indeed the government owed the former such amount.
“Even if it is proven that there is such a debt, no judgment has been rendered to qualify it as due and demandable,” it stressed.
Concurring with the ruling were Associate Justices Ramon Cruz and Henri Jean Paul Inting. RAM
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