CA affirms ruling on MIAA rental hike

The Court of Appeals (CA) has affirmed the ruling of a Pasay City Regional Trial Court declaring as null and void, a resolution issued by the Manila International Airport Authority (MIAA) increasing the rental fees and other charges to be paid by the operator of the "Park ‘N Fly" business in Parañaque City.

In an 18-page decision penned by Associate Justice Noel Tijam, the CA’s Seventh Division, however, set aside the orders of the Pasay RTC for the MIAA to impose a fixed rental rate not exceeding five percent annually and to extend the lease period of "Park ‘N Fly" operator Petroleum Distributor and Services Corp. (PDSC) for 20 more years.

The CA said the Pasay RTC correctly declared that Resolution No. 98-30 and its implementing guidelines are null and void, since these were issued without the required notice and hearing: "Hence, MIAA should refund Petroleum’s overpayment in rentals with legal interest of six percent per annum from the time the complaint was filed on Aug. 6, 2002."

In its resolution, the MIAA increased the fees and charges, including rentals, to be paid by Petroleum and other concessionaires effective June 1, 1998. It also imposes a 20 percent increase subject to the approval of the MIAA board.

Court records show that PDSC is seeking a refund of P7.1 million as of December 2002.

The CA ruled that the Pasay RTC erred in ordering the reformation of the contract between the MIAA and PDSC. The CA gave credence to MIAA’s arguments that there is no basis in the contract for the lease to be reformed, since it is clear under the contract that PDSC is bound to pay rentals which are subject to increases.

The MIAA said the five percent fixed-rate increase in rental is only a verbal agreement and was not approved by the MIAA board of directors, hence, it was not included in the contract.

The lower court also said lower court’s grant of an additional 20-year extension to the PDSC lease contract upon its expiration in 2018 is "unreasonable."

The CA agreed with the MIAA’s contention that there was no agreement between it and PDSC that, if the latter’s incurred costs exceeded P50 million, the period of lease is to be extended for an additional 20 years, since the contract states that P50 million is only the minimum cost to be spent on the project.

"If the parties intended an extension of the period of contract in case the expenses exceeded P50 million, it should have been reflected in their contract…The contract does not stipulate that Petroleum is allowed to extend its period of lease until such time it recovers its investment," the CA said.

PDSC is a firm engaged in selling and distributing petroleum and other fuel products proposed the "Park ‘N Fly Project" covering a seven-storey park and fly structure to help decongest traffic in the vicinity of the airport.

The project includes a 24-hour convenience store and fastfood restaurant, automotive repair facilities and retail and office spaces to serve airport passengers and motorists within the area for a fee.

On November 13, 1997, a consolidated contract of lease was executed by the parties stating that the lease will continue until May 31, 2008 and is renewable for another 10 years; lease rentals shall be P46.20 per square meter for open spaces and P52.80 for covered spaces; and that the property shall be automatically transferred to MIAA upon expiration of the contract.

On April 20, 1998, MIAA issued Resolution No. 90-38 prompting PDSC to file a complaint for reformation of contracts, declaration of nullity of rent increase and recovery of overpaid rentals with application of a writ of preliminary injunction before the Pasay City RTC. — Mike Frialde