Court of Appeals orders Philippine govt to pay Piatco in full

MANILA, Philippines - The government may not exercise full ownership rights over Ninoy Aquino International Airport Terminal 3 (Naia 3) until it has paid in full the P16-billion (S$455 million) in just compensation to the Philippine International Air Terminals Co. Inc. (Piatco), the Court of Appeals (CA) has ruled.

In a 21-page ruling promulgated on Oct. 10, the appellate court's Special Thirteenth Division voided for grave abuse of discretion the Pasay Regional Trial Court Branch 117's Oct. 11, 2011, and Dec. 5, 2011, omnibus orders allowing the government to settle its compensation to Piatco through an escrow account.

Instead of its earlier order for the government to fully pay the amount, the Pasay court had granted the government's plea to pay Piatco through an escrow account, even setting conditions under which the company may make withdrawals from the account.

Piatco, which the Supreme Court has recognised as the rightful owner of the terminal, contended through a petition for certiorari and prohibition that the lower court allowed "impossible and egregious conditions designed to prevent it from getting paid just compensation as owner of the Terminal 3 facilities."

"By allowing the deposit of just compensation in an escrow account and imposing conditions for its release, the Pasay Regional Trial Court gravely abused its discretion," said the ruling penned by Associate Justice Franchito Diamante.

The appellate court said the lower court's ruling was "improper" and "violates the law and Supreme Court rulings on expropriation proceedings."

In a decision issued on May 23, 2011, the Pasay court had ruled that the government must pay Piatco just compensation for Naia 3, acting on orders of the Supreme Court which had found the private company the rightful owner of the facility.

The lower court later granted on Oct. 11 and Dec. 5 of the same year the government's plea that payment be made through an escrow account, and that Piatco may only make withdrawals given several conditions.

These conditions included Piatco's warranty "that the structures and facilities of Naia 3 are free from all liens and encumbrances," and that it must "submit a duly executed deed transferring the title of the Naia 3 structures and facilities" to the government "without, however, prejudice to the amount which will finally be awarded to Piatco by the appellate court."

The Pasay court issued the ruling even pending a final Supreme Court ruling on the amount of just compensation that the government must pay Piatco, as the appellate court noted.

"The contention that equitable considerations justify the deposit of just compensation in an escrow account must, likewise, fail. There is nothing equitable in prematurely depositing just compensation when the amount thereof is still subject of appeal by all parties and worse, imposing conditions for its release," the ruling read.