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 鈥渓awful recipient of just compensation鈥� and directed the government to also pay interest on the terminal鈥檚 assessed value even after it made an initial payment in 2006.
鈥淧iatco, as the owner of the Naia 3, shall solely receive the just compensation鈥� . It is the owner of the expropriated property who is constitutionally entitled to just compensation,鈥� 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.
鈥淐ontrary to Takenaka and Asahikosan鈥檚 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,鈥� the court said.
鈥淸T]he test of who shall receive just compensation is not who built the terminal, but rather who its true owner is,鈥� it said.
Second stage
The 144-page decision released Wednesday represented the second stage of the Naia 3 expropriation, where the court determined the 鈥渞eplacement cost,鈥� or the amount the government should pay Piatco factoring in the terminal鈥檚 depreciation and maintenance and improvement costs.
The first stage 鈥渂ecame final鈥� 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.
鈥淸The] government鈥檚 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,鈥� the court said.
鈥淐ontrary to the government鈥檚 opinion, the interest award is not anchored either on the law of contracts or damages; it is based on the owner鈥檚 constitutional right to just compensation,鈥� the court said in the decision that ruled on four consolidated petitions concerning Naia 3.
Computation amended
The ruling amended the Court of Appeals鈥� 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.)
鈥淲ithout prompt payment, the property owner suffers the immediate deprivation of both his land and its fruits or income. The owner鈥檚 loss, of course, is not only his property but also its income-generating potential,鈥� 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 鈥渢he taking of the property鈥� for the purpose of public use, and 鈥渢he transfer of the property title from the private owner to the government.鈥�
鈥淭o clarify and to avoid confusion in the implementation of our judgment, the full payment of just compensation is not a prerequisite for the government鈥檚 effective taking of the property,鈥� the court said.
It said Republic Act No. 8974, the law on the acquisition of a site or location for a government infrastructure project, 鈥渁llows the government to enter the property and implement national infrastructure projects upon the issuance of the writ of possession.鈥�
As in the court order, this would necessitate the payment of interest to the property owner: 鈥淲hen the taking of the property precedes the payment of just compensation, the government shall indemnify the property owner by way of interest.鈥�
鈥淭he 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,鈥� the court explained.
While awarding just compensation to Piatco, the Supreme Court threw out the private contractors鈥� plea to get a share of the government鈥檚 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 鈥渋n reality, the equivalent of the fruits or income of the seized property.鈥�
鈥淧iatco鈥檚 claim is unmeritorious. The state, by way of interest, makes up for the shortfall in the owners鈥� earning potential and the absence of replacement property from which income can be derived,鈥� 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.鈥�Tarra Quismundo