G.R. No. 181892, 209917, 209696, 209731. September 8, 2015.
Republic of the Philippines, represented by Executive Secretary Eduardo R. Ermita, the Department of Transportation and Communications, and Manila International Airport Authority, Petitioners, vs. Hon. Jesus M. Mupas, in his capacity as Acting Presiding Judge of the Regional Trial Court, National Capital Judicial Region, Branch 117, Pasay City, and Philippine International Air Terminals Co., Inc., Respondents. / Republic of the Philippines, represented by Executive Secretary Eduardo Ermita, Department of Transportation and Communications, and Manila International Airport Authority, Petitioners, vs. Philippine International Air Terminals Company, Inc., Takenaka Corporation and Asahikosan Corporation, Respondents. / Takenaka Corporation and Asahikosan Corporation, Petitioners, vs. Republic of the Philippines, represented by Executive Secretary Eduardo Ermita, Department of Transportation and Communications, Manila International Airport Authority, and Philippine International Air Terminals Company, Inc. Respondents. / Philippine International Air Terminals Co., Inc. Petitioner, vs. Republic of the Philippines, as represented by Executive Secretary Eduardo Ermita, Department of Transportation and Communications, Manila International Airport Authority, Takenaka Corporation, and Asahikosan Corporation, Respondents.

FACTS

The factual antecedents involve the construction of the Ninoy Aquino International Airport Passenger Terminal III (NAIA-IPT III) under a Build-Operate-Transfer (BOT) scheme. The Philippine International Air Terminals Co., Inc. (PIATCO) was awarded the contract through a Concession Agreement dated July 12, 1997, later amended by the Amended and Restated Concession Agreement (ARCA) and several supplements. PIATCO engaged Takenaka Corporation for onshore construction and Asahikosan Corporation for offshore procurement. In the case of Agan v. PIATCO, the Supreme Court nullified the PIATCO contracts for being contrary to public policy. Subsequently, the Government, through the Republic, DOTC, and MIAA, filed an expropriation case, Civil Case No. 04-0876, to take over the NAIA-IPT III. The Supreme Court, in Republic v. Gingoyon, laid down the procedure for the expropriation, including the immediate issuance of a writ of possession upon deposit of the provisional value and the determination of just compensation. The Regional Trial Court (RTC) appointed a Board of Commissioners (BOC) to appraise the property. The BOC submitted its report, and the RTC, in its May 23, 2011 Decision, adopted the BOC’s appraisal. The Court of Appeals (CA), in CA-G.R. CV No. 98029, affirmed the RTC with modification, ordering the Government to pay PIATCO $371,426,688.24 with 6% interest per annum as just compensation. The consolidated petitions assail the CA Decision and the RTC’s interlocutory orders.

ISSUE

The primary issue is the determination of the correct amount of just compensation for the expropriation of the NAIA-IPT III.

RULING

The Supreme Court modified the CA decision. It ruled that just compensation must be the full and fair equivalent of the property taken, measured by its fair market value. For the NAIA-IPT III, a specialized structure, the depreciated replacement cost method was appropriate. The Court computed just compensation by starting with the construction cost, adding attendant costs, and then deducting depreciation. It rejected deductions for alleged structural defects and unnecessary areas due to equiponderance of evidence. The base construction cost was determined to be $283,474,220.43. Adding attendant costs (PIATCO’s: $30,863,646.00; BOC/RTC’s: $1,900,000.00; Government’s: $6,500,000.00) yielded a total replacement cost of $322,737,866.43. Applying a 10% depreciation for the 4-year period from the last major construction (2000) to the date of taking (December 2004) resulted in a depreciated replacement cost of $290,464,079.79. Adjusting this to December 2004 values using a 2.5% annual inflation rate produced the final just compensation of $326,046,526.33. This amount shall earn legal interest of 6% per annum from the date of taking (December 2004) until full payment. PIATCO, as the property owner, is the proper recipient of just compensation. The claims of Takenaka and Asahikosan as unpaid subcontractors, while their intervention was proper, are separate from the expropriation proceeding and must be pursued in appropriate forums. The issue in G.R. No. 181892 regarding the appointment of an independent appraiser was rendered moot and academic.