CA amends ruling on Piatco compensation

MANILA, Philippines - The Court of Appeals (CA) has clarified its recent decision doubling the just compensation earlier awarded to the Philippine International Air Terminals Co. Inc. (Piatco) by a Pasay City court for the expropriation of the Ninoy Aquino International Airport Terminal 3.

The third division of the appellate court issued an amended decision last Thursday, explaining the legal interest it has imposed on the amount of $300,206,639 in actual compensation.

In its ruling promulgated on Aug. 7, the CA imposed legal interest of six percent on the principal amount plus another 12 percent from finality of the ruling.

“Upon finality of judgment, interest on the sum due by then shall be at 6 percent per annum until fully paid,” the amended ruling read.

The CA said that the six percent legal interest – which is half of the previously imposed 12 percent legal interest on compensation cases – is based on the Bangko Sentral ng Pilipinas (BSP) Circular No. 799, 39 Series of 2013, which took effect last July.

It stressed that the BSP order “effectively modified the interest rate rulings in Eastern Shipping Lines Inc. vs. Court of Appeals. Eastern Shipping was the basis of the court’s earlier imposition of a 12 percent interest from finality of judgment.”

The amount of the total compensation with interest so far, however, remained the same.

“The Republic is thus ordered to pay Piatco just compensation as herein determined and which sum has reached a net sum of $371,426,688.24 as of 31 July 2013,” read the ruling penned by Associate Justice Apolinario Bruselas Jr.

The CA issued the amended decision pursuant to Rule 135, Section 5(G) of the Rules which empowers the court on its own initiative “to amend and control its processes and orders so as to make them conformable to law and justice.”

In its ruling, the CA modified a May 23, 2011 decision of a Pasay City court, which awarded Piatco just compensation of $175,787,245.10 less than $59,438,604 already paid by the government to the NAIA-3 builder in September 2006, or a total of $116,348,641.10.

It pegged the compensation at $300,206,639 minus the $59,438,604 or a net sum of $240,768,035 – an amount more than double the net amount set by the lower court.

The CA also imposed legal interest of six percent on this compensation, making the amount over 300 percent more than what the lower court had set.

Associate Justices Rebecca de Guia-Salvador and Samuel Gaerlan concurred with the ruling.

The CA held that the lower court erred when it deducted depreciation, deterioration and non-compliance from the construction cost, citing lack of clear evidence of any massive structural defect.

It explained that the “much publicized” collapse of a portion of the ceiling of the NAIA Terminal 3 in 2008 could not be used to justify deductions due to supposed deterioration of the structure.

The CA also ruled that a structure’s value depreciation should not be deducted from the replacement cost or just compensation, which should either be equal or higher than the construction cost.

It also ruled that payment of interest to Piatco for the compensation would be “just and reasonable.”

But it placed the interest rate at six percent, half of what Piatco was asking for and what the Board of Commissioners had recommended.